Internal revenue Code (1986) TRP

Question 1

Who is a Tax Return Preparer?

Answer 1

A person who is paid or employs people

1) to prepare a substantial part of a federal tax return or claim for refund
2) federal income tax,
3) federal estate and gift tax returns,
4) employment tax returns and
5) excise tax returns

Question 2

What are the Types of TRPs? Explain

Answer 2

1) Signing TRPs - bear primary responsibility for the accuracy of the return
2) Non signing TRPs - anyone other than a signing TRP bearing responsibility for preparing a part or substantial portion of the return

Question 3

What is Substantial portion of a return?

Answer 3

If a TRP has worked on a portion of a return resulting in a large deduction - it is called a “substantial portion” of the return - UNLESS

1) it is less than 10,000
2) it is less than 400,000 AND also less than 20% of the Gross income

Question 4

Section 6694 (a) and (b)

Section 6695

Section 6700

Section 6701

Section 6713

Section 7407

Criminal provisions
Section 7201
Section 7206

Miscellaneous Tax Crimes
Section 7203

Answer 4

6694 - understatement of tax liability - (a) Negligent conduct (b) willful and reckless conduct

6695 - Failure to 1) furnish copy to client 2) preserve copies of return 3) provide IRS with TRP ID number 4) sign return

6700 - Penalties for those who promote abusive tax shelters

6701 - Aiding, Abetting of Understatement of tax liability

6713 -Penalty for violating confidentiality of client information except in cases of court orders, peer reviews and preparation of return

7407 - Civil fines, narrow and broad injunctions enjoining TRPs from violating certain IRC codes and barring TRPs from serving as TRPs at all, respectively

7201 - Tax Evasion
7206 - Tax Fraud

7203 -