The preparer's negligent or intentional disregard of rules and regulations. Understatement of taxpayer's liability due to willful or reckless conduct of the tax return preparer.Īnswer: Understatement of taxpayer's liability due to willful or reckless conduct of the tax return preparer.Ī compensated preparer is liable for a penalty if the preparer's understatement of taxpayer liability on a return or claim for refund is due to Wrongful disclosure or use of tax return information by the tax return preparer. Failure to file correct information returns by a tax return preparer.Ĭ. Understatement of taxpayer's liability due to failure to follow substantial authority by the tax return preparer.ī. ![]() In this situation, Powell may be subject to which of theĪ. Powell understated the taxpayer's liability because heīelieved keeping the tax liability low would help retain the taxpayer as a client. Return), he intentionally did not report the income on the taxpayer's tax return. ![]() Although Powell knew that the taxpayer's income should be reported on the taxpayer's Form 1040 (U. A taxpayer presented her tax return preparer, Dev Powell, with documentation supporting income she had earned as an independentĬontractor.
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