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July 2010

Preparer Tax Identification Number Fees

Prop. Reg. 300.9 (found in REG-139343-08) would require the payment of a $50 user fee to apply for or renew a Preparer Tax Identification Number (PTIN). The fee would be based on an annual PTIN renewal period and would be nonrefundable. A third party vendor will administer the PTIN application and renewal process “and will charge a reasonable fee that is independent of the user fee charged by the government.”

 


DEMOCRATIC SENATORS EXPRESS CONCERN ABOUT 1099 FILINGS

A group of Democratic Senators has written to IRS Commissioner Douglas Shulman expressing concerns about new requirements for expanded 1099 reporting.  Their concerns focused on the paperwork burden the new 1099 filing rules would impose on small business.  The Senators insisted that the IRS develop ways in which small businesses could reduce expected paperwork from this requirement and that the IRS report its proposed solutions to the Senate Committee on Small Business and Entrepreneurship prior to implementation of the new law.  


OPR Case Disbarring CPA Has Message For All CPAs

The Office of Professional Responsibilities has announced that Tim W. Kaskey, CPA, has been disbarred from practice before the Internal Revenue Service. The announcement by Karen L. Hawkins, Director of OPR, states that, “Practitioners who think OPR isn’t serious about due diligence should take heed … [practitioners] must make reasonable inquiries if the information furnished by a client appears to be incorrect, inconsistent, or incomplete.”

 

In addition to the failure to exercise due diligence, there were at least two other aggravating factors in the decisions regarding Mr. Kaskey: (1) Mr. Kaskey’s failure to file multiple years of personal federal income tax returns; and (2) Mr. Kaskey’s failure to respond to the Complaint by OPR and provide a defense. It is possible that there was an explanation to the due diligence portion of the Complaint or there might have been mitigating factors to the failure to file returns and pay taxes, but these possible defenses were not considered in the absence of Mr. Kaskey’s provision of a defense.

 

What is clear, and the lesson to be drawn by all CPAs from this matter, is that OPR is very serious regarding enforcement of Circular 230, including the provisions regarding filing of returns by the practitioner (CPA) and the preparation of returns by the practitioner for clients and the exercise of due diligence in connection with that preparation. An important lesson is that client representations that lack credibility must be further investigated prior to taking a position on a return.

 

http://www.irs.ustreas.gov/newsroom/article/0,,id=225261,00.html