professional responsibilities and tax preparer penalties Flashcards
error
The IRS does not impose a penalty on a CPA for making an error in calculating a
tax return.
Penalty
A CPA must sign tax returns that the CPA prepares. Willful violation of this rule
can result in imposition of a penalty
revoke CPA license ( different ways and from different sections within the industry)
Only a state board of accountancy has the authority to suspend or revoke a CPA’S license to practice public accounting. The SEC may only suspend or revoke a CPA’S authority to practice before the SEC with respect to public companiesThe AICPA and a state society may only suspend or revoke a CPA’S
membership in the AICPA or the state society, respectively.
Disclosure of information
An accountant may disclose confidential client information to any party if the client specifically consents to the release of information. Generally, confidential client information should not be disclosed to a court unless it is subpoenaed or the client consents
disclosure of info
The CPA generally cannot give out a client’s confidential information to anyone
without the client’s consent. However, exceptions are generally made for court subpoenas and state CPA
society quality control panels.
Copy of return
The CPA must retain a completed copy of each return for three years after the
close of the return period (IRC Section 6107)
disclosure
Tax preparer penalties may be assessed for improper use or disclosure of
information. Acceptable circumstances for disclosure include:
1. Computer processing
2. Peer review
3. Administrative order (court order)
information retained by tax preparer
For each tax return prepared, a tax preparer must retain either the taxpayer’s name
and identification number, or a copy of the return.
due diligence
The due diligence requirements address eligibility checklists, computation worksheets, and record
retention.
burden pf proof
With respect to the penalty for aiding and abetting an understatement of tax liability
on a tax return, the burden of proof shifts to the IRS from the taxpayer
Which of the following statements is correct for the disciplinary power of the state boards of
accountancy?
The three broad categories of misconduct are misconduct while performing
accounting services, misconduct outside the scope of performing accounting services, and a criminal
conviction
state board
The state board of accountancy can conduct a formal hearing for possible
disciplinary action
suspension
Membership in the AICPA can be suspended or terminated without a hearing forvcertain offenses. These offenses include but are not limited to (1) proof of conviction of a crimevpunishable by imprisonment for more than one year, (2) proof of conviction for willful failure to file anyvincome tax return, (3) proof of conviction for filing a false or fraudulent income tax return or aiding in thevpreparation of a false or fraudulent income tax return of a client
tax prep responsibilities
Rule: A compensated preparer is liable for a penalty if his understatement of taxpayer liability on a return
or claim for refund is due to negligent or intentional disregard of rules and regulations. A preparer is not
required to obtain supporting documentation unless he has reason to suspect the accuracy of the
taxpayer’s figures; however, the preparer must make reasonable inquiries if the taxpayer’s information
appears incorrect or incomplete
tax preparer only if received compensation
. Joe is the trustee of the trust. He is not a tax return preparer because he is not
preparing the return for compensation.
