Who may be affected by monetary penalties imposed by the Internal Revenue Service when a Tax Professional fails to meet due diligence requirements?
Ans: Both the tax practioner and the assessee will be liable for penalties under IRS 6695(a), The penalties for the assessee are as follows:
1. will be liable to return tax amount along with interest'.
2. may be subject to 20 percent accuracy related penalty and 75 percent fraud penalty.
3. may be banned from claiming refund for next two years.
Penalties for tax professionals:
1. a penalty upto $ 500 for each failure to comply with requisite due deligence.
2. A minimum penalty of $ 1000 , if client tax is under deposired knowningly.
3. A minimum penalty of $5,000 if professional prepare client return and IRS finds any part of the amount of taxes owed is due to your reckless or intentional disregard of rules or regulations
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