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REG-Ethics & Federal Tax Procedures
Terms in this set (26)
What are the accuracy penalties?
20% of the tax due penalty (waived if there is a reasonable basis for position)
What is a substantial understatement?
Understatement is substantial if larger than:
For individuals: 10% of correct tax amount or $5K
For Corps: Lesser 10% of correct tax (or $10K flat if 10% is large) or $10M
What is the penalty to the taxpayer if failure to file is fraudulent?
15%, up to a max of 75% of tax due
What is the penalty for late payment?
0.5% (1/2 percent) per month, up to max of 25% of taxes owed
What is the penalty for non payment?
5% a month accrues, and late payment penalty is not applicable
What is the penalty for non filing?
5% a month of tax due, up to 25% of tax due. Minimum penalty if filed more than 60 days late- lesser of $435 or 100% of the unpaid tax.
What is "appropriate disclosure" for a tax position?
Description of position taken
Amount of tax involved
Basis for position
What is "reasonable basis"
CPA did research and concluded that there is a 20-33% chance that IRS will support position. Disclosure is needed
What is a "realistic possibility"
Chance that a position will be upheld 33% or more
What % chance for a substantial authority must there be for the IRS to support a decision for any given federal tax position?
40% chance or more
What regulations exist for an accountant to practice before the IRS?
Treasury Department Circular 230
What is the penatly for evading taxes?
Civil Fraud Penalty- 75% of tax understatement
Corporations owing $500 or more in income tax for the tax year are required to make estimated tax payments or be subject to an interest penalty. The payments must be equal to the lesser of 100% of the tax liability for the current year (i.e., the annualized income method) or the preceding year (i.e., the preceding-year method).
A tax return preparer, who prepares a return or refund claim, which includes an "unreasonable position," must pay a penalty of
the greater of $1,000 or 50% of the income derived by the preparer for preparing the return. A position is unreasonable if there is not sub authority for it. Exception: doesn't apply if the position was disclosed and there is a reasonable basis for it.
If the understated tax liability is due to an unreasonable position and the preparer willfully attempts to understate the tax liability or recklessly or intentionally disregards rules or regulations, the penalty is
the greater of $5,000 or 75% of the income earned by the tax preparer for preparing the return or claim
What is the penalty for failure to sign a return?
Penalty for failure to provide PTIN?
Penalty for failure to retain a copy of a return?
Penalty for failure to file correct information return?
$50 (includes not listing all names and social security numbers of people who help file return)
Penalty to furnish a copy of return to taxpayer?
Penalty for aiding and abetting federal tax evasion?
TRP will be prohibited from being a preparer and will face federal criminal prosecution.
Penalty for TRP endorsing a refund check or negotiating a refund check issued to taxpayer?
Penalty for promoting abusive tax shelters?
Penalty for unauthorized disclosure of info by TRP?
$250, up to a max of $10K per year. Also is a misdemeanour crime and can face conviction of a fine of $1000 and imprisonment of up to a year. If disclosure is made in connection with a crime, penalty increases to $1000, up to a max of $50K per year
Penalty of TRP filing fraudulent returns or statements?
Guilty of a misdemeanour and upon conviction, a fine of not more than $10K and possibly imprisonment of not more than 1 year
Penalty of TRP committing fraud or making false statements?
Guilty of a felony and can face a fine of not more than $100K and possible imprisonment of not more than 3 years
OTHER SETS BY THIS CREATOR
REG- Federal tax on properties
REG- Business Law
State and Local Governments
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