Preparer Penalty Provisions

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On December 31, the IRS and Treasury released Notices 2008-11, 2008-12 and 2008-13 which begin the implementation of the statutory changes to the section 6694 preparer penalties enacted as part of the Iraq war funding bill that became law last May. Among other critical information of which you need to be aware, the IRS has provided "Interim Penalty Compliance Rules" containing an alternative approach to comply with the section 6694 reporting standards for a position for which there is substantial authority, but for which you do not have a reasonable belief that the position would more likely than not be sustained on the merits. In such a situation, you can comply by advising your client of the difference between the tax preparer standards under new section 6694 and the taxpayer penalty standards under section 6662, and contemporaneously documenting that advice, rather than by preparing a Form 8275 disclosure with respect to the position.Details about these notices and about the changes made last May to the section 6694 preparer penalty provisions were sent to AICPA Tax Section members in an E-Alert.While the AICPA plans to continue its support of IRS and Treasury as they draft the final regulations, we also continue to generate support for legislation such as H.R. 4318, introduced by Representatives Joseph Crowley (D-NY) and Jim Ramstad (R-MN), which would provide needed legislative relief.More information can be found at the AICPA Tax Center. S. Raines, Sr. Financial Advisor/Tax Preparer