On June 17, 2008, the IRS released a proposed Tax Return Preparer Penalties notice that discusses the procedures for filing claims for credit or refund for penalties assessed against tax return preparers under sections 6694 or 6695. It is also covers the new appraiser penalty under section 6695A.
The notice proposes:
- the amount of penalties assessed against the individual and the firm shall not exceed 50 percent of the income derived (or to be derived) by the firm from the relevant engagement(s) relating to the position(s) giving rise to an understatement
- to meet the “reasonable basis” standard, a tax return preparer may rely in good faith, without verification, upon information furnished by a taxpayer, advisor, another tax return preparer, or other party
- the de minimis exception applies if the item giving rise to the understatement is (i) less than $10,000, or (ii) less than $400,000 if the item is also less than 20 percent of the taxpayer’s gross income (or, for an individual, the individual’s adjusted gross income).
A public hearing has been scheduled for Monday, August 18, 2008, at 10 a.m. in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. Send your comments on the proposal to: CC:PA:LPD:PR (REG-129243-07), room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044 or electronically here.
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