- Tax Controversy and Litigation
Tax and Estate Planning
- Tax Controversy and Litigation
Subscribe to Mailing List
Tax professionals and tax preparers are not themselves immune from the IRS. In fact, tax preparer investigations are a common occurrence, and McLaughlin Legal helps defend tax professionals during IRS, Office of Professional Responsibility (“OPR”), and Treasury Inspector General for Tax Administration (“TIGTA”) investigations.
What are Some of the Issues a Tax Preparer Could Face?
A tax preparer investigation can cover any number of issues. Some of the more common, that McLaughlin Legal has helped defend against, include:
1. Circular 230 Discipline2. Earned Income Tax Credit (EITC) Due Diligence3. Preparer Penalties4. 31 U.S.C. § 333 Violations5. Criminal Investigations6. Preparer Injunctions
Circular 230 are the consolidated rules that govern the standards of practice for tax professionals before the IRS, a violation of which can result in censorship, suspension, or disbarment. The IRS’s Office of Professional Responsibility (“OPR”) is tasked with interpreting and applying Circular 230, and is the agency responsible for Circular 230 discipline matters. Some of the more common provisions of Circular 230 that get tax practitioners in trouble include:
Giving false or misleading information, or participating in any way in the giving of false or misleading information to the Department of the Treasury or any officer or employee thereof, or to any tribunal authorized to pass upon Federal tax matters, in connection with any matter pending or likely to be pending before them, knowing the information to be false or misleading. Facts or other matters contained in testimony, Federal tax returns, financial statements, applications for enrollment, affidavits, declarations, and any other document or statement, written or oral, are included in the term “information.”
Willfully failing to make a Federal tax return in violation of the Federal tax laws, or willfully evading, attempting to evade, or participating in any way in evading or attempting to evade any assessment or payment of any Federal tax.
Disbarment or suspension from practice as an attorney, certified public accountant, public accountant, or actuary by any duly constituted authority of any State, territory, or possession of the United States, including a Commonwealth, or the District of Columbia, any Federal court of record or any Federal agency, body or board.
Contemptuous conduct in connection with practice before the Internal Revenue Service, including the use of abusive language, making false accusations or statements, knowing them to be false, or circulating or publishing malicious or libelous matter.
If you are under investigation by the IRS OPR, McLaughlin Legal can help.
The EITC is a refundable tax credit for low to moderate income working individuals; however, tax professionals that prepare returns with EITC’s face additional due diligence standards. Under IRC § 6695(g), the law provides that:
Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary by regulations with respect to determining eligibility for, or the amount of, the credit allowable by section 32 shall pay a penalty of $500 for each such failure.
Generally speaking there are 4 due diligence requirements for tax professionals:
- Complete and Submit the Eligible Checklist
- Compute the Credit Correctly
- Have Certain Knowledge of Facts
- Keep Certain Records
The failure to meet the 4 due diligence standards could subject a return preparer to a $500 penalty, for each failure.
Tax preparers, much like ordinary taxpayers, can face significant penalties. For example, a return preparer could be penalized for understating a taxpayer’s liability under IRC § 6694, failing to provide a taxpayer with a copy of their return, or failing to retain a copy of a return or a list of returns prepared.
The principal return preparer penalty that concerns most practitioners is found in IRC § 6694. The law provides in part that:
If you are a return preparer under investigation for a preparer penalty like those in IRC §§ 6694 or 6695, McLaughlin Legal can help.
Section 333 of Tile 31 prohibits return preparers (or anyone for that matter) from using the IRS’s name or symbol in a way that could be interpreted as conveying the impression the use was approved, endorsed, sponsored, or authorized by, or associated with, the IRS. The specific statute provides that:
31 U.S.C. § 333 violations are typically investigated by Special Agents of the U.S. Treasury Inspector General for Tax Administration (“TIGTA”). If you are under investigation by TIGTA for a 31 U.S.C. § 333 or other violation, McLaughlin Legal can help.
Tax return preparers are frequently the target of criminal investigations. Some of the crimes that tax return preparers are often charged with include:
- § 7206 – Fraud and False Statements
- § 7207 – Fraudulent Returns, Statements, or Other Documents
The U.S. Justice Department’s Tax Division and the IRS have worked hard to shut down tax return preparers using the civil injunction program. Under the preparer injunction program, the government sues tax preparers to bar them from engaging in specified misconduct or from preparing tax returns for others. The IRS and Department of Justice have used preparer injunctions to shut down over 500 return preparers in the past 10 years alone.
The law generally provides that:
Why McLaughlin Legal?
McLaughlin Legal is a boutique tax law firm, specialized in defending taxpayers and resolving tax disputes. Not only do we have extensive experience in defending individuals and businesses, McLaughlin Legal has been on the front lines defending other tax practitioners before the IRS, OPR, and TIGTA. Our structure, experience, and 3 guiding principals ensure that you will receive representation by tax attorneys who care about getting the best possible results.
1. Personalized2. Specialized3. Committed
McLaughlin Legal knows that each client’s goals, objectives, and issues are unique. We pride ourselves on a personalized approach to each client’s case and responsiveness to their needs. We believe in having a strong personal relationship with each individual client who entrusts us with their case.
McLaughlin Legal prioritizes expertise and a confidence in our concentrated area of the law. By concentrating our practice on tax litigation and estate planning, McLaughlin Legal can offer the same resources of larger law firms with more personalized and cost-effective services. When a client needs tax litigation or estate planning services, we can match the level of service of any other law firm.
McLaughlin Legal is committed to achieving the best result possible for each client who entrusts us with their case. We believe that being responsive, trustworthy, patient, professional, and honorable are the foundations of a successful law firm. Our firm is driven by the highest commitment to protecting our clients’ rights and achieving the best results possible.
If you are under investigation as a tax professional, McLaughlin Legal can help.
Interested in Learning More?
If you are interested in learning more about how McLaughlin Legal defends tax preparer under investigation, please feel free to contact us today for a free consultation.