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The Internal Revenue Service has formed special groups to go after tax preparers who are taking advantage of certain tax credits.
We are a local South Florida tax firm who has been in practice since 1982. Please call us for free tax consultation. Without question, we can provide your very best tax defense for the tax preparer tax audit.
If IRS has sent you a letter or is knocking on your door you may want to call us, why?
We are former IRS agents, managers and teaching instructors and know how to provide your very best tax defense.
How the process with IRS starts:
More and more tax preparers will start to get letters or personal visits from the Internal Revenue Service as IRS is completely expanding the compliance initiative across the United States.
If an IRS agent knocks on your door my advice would be to let them know you are going to be represented at the contact a tax professional to submit a power of attorney so you have a seasoned and experienced veteran conducting and explaining to IRS your best tax defense.
If you have received that knock on the door you want to provide the Internal Revenue Service your very best tax defense.
The IRS estimates one in four EITC claims contain some type of mistake, costing the government $11 billion to $14 billion per year in erroneous payments.
The management of Internal Revenue Service feels they must stop the bleeding because the enormous amount of payments being lost from United States treasury and revenue.
Because the tax professional community prepares two-thirds of EITC claims, the quality of their work has a significant impact on reducing claims paid in error.
Errors occur for many reasons, including:
• Lack of knowledge about EITC tax law,
• Honest preparer mistakes,
• Client provides incorrect information intentionally or unintentionally,
• Disregard of EITC due diligence requirements,
• Blatant (criminal) disregard of tax laws to claim EITC in error,
A tiered compliance approach, initiated last year, focuses on reducing EITC errors by helping:
• Helping new EITC preparers get off to a good start,
• Ensuring experienced preparers who filed questionable EITC claims understand the law and their due diligence requirements,
• Conducting on-site visits or due diligence audits of preparers filing returns with high probability of EITC errors; and,
• Barring preparers with a history of non-compliance from return preparation.
This 4 facet compliance lessens the degree of risk for future errors. It also aligns with IRS’s overall effort to boost taxpayer compliance and strengthen industry standards within the tax professional community.
BEWARE : Consequences of Non-compliance
EITC return preparers who fail to meet the knowledge standard and other due diligence requirements are subject to civil penalties.
Their clients who filed a return with a false EITC claim could also face penalties in addition to repaying any credit paid in error plus interest. In some cases I have seen the client sue the tax preparer and/or the business.
Penalties include:
• $500 penalty for each due diligence failure to comply for return preparers or their employers.
• A minimum $1,000 penalty against return preparers who prepare EITC claims if any part of an understatement of tax liability is due to an unreasonable position.
• A minimum $5,000 penalty against return preparers who prepare EITC claims if any part of an understatement of tax liability is due to reckless or intentional disregard of rules or regulations by the tax preparer.
• Clients face accuracy and/or fraud penalties, plus a ban from claiming EITC for 2 or 10 years for incorrect claims.
Return-related preparer penalties can also result in:
• Disciplinary action by the IRS Office of Professional Responsibility.
• Suspension or expulsion of the preparer’s firm from participation in IRS e-file.
• Injunction barring preparation of federal tax returns.
More than anything you do not want this case going to criminal and investigation for criminal enforcement. You want to make sure this stays a civil matter.
