P-1: Preparing Returns (Tax Return preparer) Flashcards
Tax Return preparer
What is a tax return preparer?
Any person who prepares for compensation, or who employs one or more persons to prepare for compensation, all or a substantial portion of any return of tax or any claim for refund of tax.
T/F if a person completes a substantial portion of the return but not the whole thing, are they considered a preparer?
Yes,
It is not necessary to prepare the entire return: a person is considered a preparer as long as he prepares a substantial portion of the return.
What is a signing tax return preparer?
Am individual tax preparer who has the primary responsibility for the overall substantive accuracy of the preparation of such return or claim for refund.
What four instances does not qualify an individual as a return preparer in itself?
- furnishes typing, reproducing, or other mechanical assistance,
- provides tax assistance under a Volunteer Income Tax Assistance (VITA) program established by the IRS,
- prepares as a fiduciary a return or claim for refund for any person, or
- prepares as a fiduciary a return or claim for refund for any person, or
- prepares a claim for refund for a taxpayer in response to any notice of deficiency or in response to any waiver of restriction after the commencement of an audit.
What must a preparer with primary responsibility for accuracy of a return do?
A preparer with primary responsibility for accuracy of a return must sign the return, enter PTIN on return, and give a copy of the return to the taxpayer no later than when presented for signature.
What is any person that prepares a tax return or claim for refund?
A person that prepares a tax return or claim for refund is a tax return preparer.
When is a person not considered a tax return preparer?
A person is not considered a tax return preparer if they are unpaid, the return is for an employer, or prepared as a fiduciary.
When must a tax preparer furnish a copy of a return or claim for refund to a taxpayer?
A tax preparer must furnish a completed copy of the return or claim for refund to the taxpayer no later than the time it is presented for the taxpayer’s signature.
What information is a tax preparer required to include at the end of a return that he prepared?
A tax preparer is required to include his firm’s name and address or his own business address (if self-employed).
What records must a preparer keep for at least 3 years after the close of the return period during which the return or claim for refund was presented for signature to the taxpayer?
The preparer must retain a copy of the return or a record of the tax ID number, and taxable year of the taxpayer and name of the individual preparer required sign the return.
When retaining a copy of a clients return for three years when does the three-year period start?
The three-year period starts at the end of the return period.
When is an electronic copy of the form 1040 valid for record retention?
The electronic copy of the Form 1040 is only valid if it is complete and has all the appropriate schedules and other filed materials.
Identify four pieces of information that a preparer must maintain for every return prepared?
- The taxpayer’s name
- The taxpayer’s identification number
- The taxable year of the taxpayer for whom the return was prepared
- The type of return or claim for refund prepared
An e-file provider is not a tax return preparer for the purpose of assessing most preparer penalties as long as his services are limited to typing, reproduction or other mechanical assistance. In the case that there is a small error when the ERO is entering information, would the Ero be responsible?
No, this alteration is considered to come under the mechanical assistance exception described in section 301.77051-15(c). A non-substantive change is a correction or change limited to a transposition error, misplaced entry, spelling error, or arithmetic correction.
