Question

Respond to the following in a minimum of 175 words:

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?

*Please do not copy & paste from a prior answer, I mean no disrespect by any means but some of those answers are not helpful and the reason I posted a seperate question. Thanks, I appreciate any assistance.

Answer 1

Tax practitioners have the following professional responsibilities while providing their services

Advocacy vs. Independence in Tax Practice
When considering relevant ethical requirements, there is an important distinction for tax practitioners regarding “independence.” Although independence is always required a tax practitioner also needs to work as an advocate for his client.

Internal Revenue Code Provisions
Members need to be alert to and comply with all other standards and ethics rules contained in the Internal Revenue Code contains.

Competency requirement

A practitioner must possess the necessary competence to engage in practice before the Internal Revenue Service. Competent practice requires the appropriate level of knowledge, skill, thoroughness, and preparation necessary for the matter for which the practitioner is engaged.

Procedure to require compliance

Tax practitioners responsible for a tax practice or tax department must develop appropriate procedures and provide adequate staff supervision to ensure that all individuals they supervise comply with relevant rules and regulations.

Conflicts of interest

In the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others.

Penalties that can accrue on to a tax preparer for making errors in company's tax returns are:-

IRC § 6694 – Understatement of taxpayer’s liability by tax return preparer.
IRC § 6694(a) – Understatement due to unreasonable positions. The penalty is the greater of $1,000 or 50% of the income derived by the tax return preparer with respect to the return or claim for refund.

IRC § 6694(b) – Understatement due to willful or reckless conduct. The penalty is the greater of $5,000 or 75% of the income derived by the tax return preparer with respect to the return or claim for refund.

Yes the intent due to which error has occured changes the penalties as can be seen in the penalties provided above.