What's the deal with IRS preparer penalty audits? It's like the IRS is saying, "We know you're a tax preparer, so we're going to hold you to a higher standard."
And the penalties can be steep. Up to 75% of the additional taxes owed. That's a lot of money, even for a successful tax preparer.
So, what can tax preparers do to avoid IRS preparer penalty audits? Well, the best way is to do your job right. Make sure you're familiar with the tax code, and make sure you're taking all of the necessary steps to ensure that your clients' returns are accurate.
But even if you do everything right, there's still a chance that you could get audited. So, it's important to be prepared. Keep good records, be careful with tax credits, and use tax preparation software.
And if you're not sure about something, don't be afraid to ask for help. There are plenty of resources available to tax preparers.
So, there you have it. Everything you need to know about IRS preparer penalty audits. Now, go out there and do your job right!
And here are some common violations that tax preparers commit:
Willfully understating tax liability
Recklessly manipulating deductions
Falsifying or altering documents
Failing to file returns on time
Negligently making errors on returns
Here are some exceptions and safeguards to avoid penalties:
Reasonable cause: If you can show that you had reasonable cause for making a mistake, you may avoid a penalty.
Substantial authority: If you can show that you had substantial authority for your interpretation of the tax law, you may avoid a penalty.
First-time offenders: If you're a first-time offender, you may be eligible for a reduced penalty.
If you're ever audited by the IRS, it's important to cooperate with them. Be honest and upfront about everything, and provide them with all of the documentation they need.
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