REG 9 - Filing Requirements & Preparer's Penalties

Question 1

Returns due on 4/15?

Answer 1

• Individual Income Tax Return (1040)
• Amended Individual Tax Return (1040X)
• Gift Tax Return (709)
• Trust Income Tax Return (1041)
• Estate Income Tax Return (1041)
  
  • ​Estate Tax Return (706) - Due 9 mos after death
• Partnership Tax Return (1065)

Question 2

Returns due on 3/15?

Answer 2

• S Corporation Tax Return (1120S)
  
  • Election to operat as an S-Corp
• Corporate Tax Return (1120)

Question 3

Returns due on 5/15?

Answer 3

• Exempt Organization Tax Return (990)

Question 4

There are several special obligations imposed on paid preparers of income tax returns, what are they?

Answer 4

• Preparer must sign preparer’s declaration
• Provide their tax identification number. (TIN)
• Return must be timely filed & a copy must given to taxpayer.
• A copy of the return must be retained for 3 years.
• Preparer need NOT obtain from the taxpayer documentation of information provided to prepare the return, but must make reasonable inquiries about the existence of such support where appropriate.

Question 5

Penalties are assessed against preparers who knowingly or recklessly? (4)

Answer 5

1. Understate the tax liability of a client.
2. Giving erroneous advice or fail to advise a client of tax elections that are available.
3. Endorse or negotiate a refund check for their own account.
4. Adopt a frivolous position on a tax issue ($5000 Penalty)

Question 6

More Likely Than Not

Substantial Authority

Realistic Posibility

Reasonable Basis

Answer 6

More Likely Than Not > 50% probability of success

Substantial Authority ≈ 40% probability of success

Realistic Posibility ≈ 33% probability of success

Reasonable Basis ≈ 20% probability of success

Question 7

When are Corporate estimated tax payments due?

What are the exceptions to avoiding penalties? (4)

Answer 7

The quarterly estimated tax payments are due by the 15th day of the 4th, 6th, 9th, and 12th month of the taxable year.

The penalty doesn’t apply, if one of the following exceptions occurs:

• Small balance - less than $500
• Annualized Income - installments each quarter cover the tax on the income up to date.
• Seasonal method - installments each quarter cover the tax on the income up to date.
• Previous year - payments at least 100% of prior year tax liability

Question 8

When are Individual estimated tax payments due?

What are three exceptions to penalties?

Answer 8

The quarterly estimated tax payments are due by the 4th, 6th, 9th, months of the taxable year & by the 15th of January of the taxable year.

There are certain exceptions to the penalty that are available:

• Prior year tax liability - no penalty if estimated payments equal 100% of last year.
  
  • If AGI is over 150, estimated must be 110% of last yr
• Annualized Income - each quarter is up to date
• Current tax liability - 90% of current income