26 US Code 6694(a)(2) Penalties for preparers giving rise to certain understatements of liability on a return.

End of Return Period: June 30, Beginning of Return Period July 1

• Returns and records must be retained for a minimum of three years from July 1

Form 8453 - Estate or Trust Return - No signature required - Must be paper filed

• Must be retained until the end of the calendar year in which return was filed

Form 8879 - Signature by ERO, Tax Preparer, Taxpayer. (Rubber stamp for ERO permitted)

Return is officially filed at the time the IRS Acknowledges acceptance of the transmitted return

Authority of Positions

Hierarchy:

• "Not Frivolous" standard
• "Reasonable Basis" standard - 33% likelihood of being upheld
  • The base level of authority in order to not be in violation of tax preparer responsibility
  • Requires Disclosure
  • Beneath this the position cannot be taken
• "Substantial Authority" standard - 40% likelihood of being upheld
  • The base level of authority in order for disclosure not to be required
• "More Likely Than Not" standard - 50% likelihood of being upheld
  • The base level of authority for tax shelter type positions

Penalties

• EIC Due Diligence Requirements - $540 - No Limit
• Endorsement or negotiation of check issued to tax preparer - $540
• Unauthorized disclosure of taxpayer information - $250 - $10,000 Limit
• Undisclosed Positions lacking substantial authority - $1,000 or 50% of fee
  • Understatement of Tax Liability due to an unreasonable position - $1,000 or 50% of fee

Section 6695 Penalties

• Failure to Provide a Copy of the Return - $50