Share your understanding of a tax preparer’s professional responsibilities

Discussion topic:
1.      Share your understanding of a tax preparer’s professional responsibilities. What penalties, if any, can accrue to a tax preparer who makes errors on a company’s tax return? Does intent (malicious vs. accidental) change those penalties?

Student Post
2.      Share your understanding of a tax preparer’s professional responsibilities. What penalties, if any, can accrue to a tax preparer who makes errors on a company’s tax return? Does intent (malicious vs. accidental) change those penalties?
Tax preparers have an important job that requires earning the trust of the client. It is the responsibility of a taxpayer to prepare and submit an accurate income tax return to the Internal Revenue Service. If the preparer makes a mistake, the taxpayer can incur late fees and penalties. Tax preparers must keep up to date on the continually changing tax codes, and have knowledge of both federal and state tax laws. To complete an income tax return, the tax preparer must collect and discuss the client’s current year financial information. This information will typically include income statements, such as Form W-2; expense documents, such as receipts; the names and Social Security numbers of all dependents; and any other forms that the client received. These forms will determine whether any supporting documents are required to complete the return. Many tax preparers use income tax software to prepare income tax returns. These computer programs present the preparer with a checklist, which helps the program to determine which forms are required to complete the return. For those preparers who do not use tax software, the IRS offers fillable forms, which perform the calculations automatically. While preparing the forms, the tax preparer will search for tax-saving deductions or credits and try to reduce or eliminate the client’s tax. If the client has an unusual tax situation, the preparer will refer to the IRS website or Publication 17 for assistance. Once the forms are completed, the tax preparer will advise the client of the tax due or amount of the refund.

Reference
https://work.chron.com/responsibilities-tax-preparer-1065.html

3.      “Tax practitioners should absolutely have a working knowledge of these statutes, rules, and guidelines because (1) they establish the professional standards for the practitioner and (2) failure to comply with the standards could result in adverse consequences for the tax professional, such as being admonished, suspended, or barred from practicing before the IRS; being admonished, suspended, or expelled from the AICPA; or suffering suspension or revocation of the CPA license. Given the voluminous nature of applicable statutes, rules, and codes, we will simply provide a brief overview of the major common sources of tax professional standards.” (Hernandez, 2019). This quote summarizes the penalties, but the intent can always change the severity of the punishment from fines to suspension or jail time depending on the offence. From an ethical standpoint tax preparers have to adhere to the rules laid out by GAAP (general Accepted Accounting Principles). Depending on the intent the penalties can be reduced or increased to fit the crime. Class, what is your take on the intent of the crime and how it affects the penalties of not following rules and guidelines for tax preparers?

References:
Hernandez, S. ADVANCED TOPICS IN ACCOUNTING RESEARCH. [University of Phoenix]. Retrieved from https://phoenix.vitalsource.com/#/books/1260144933/