Higher IRS Due Diligence Standards

[kcjenkins]

There is a good article here -

Preparing Your Clients for Higher IRS Due Diligence Standards

http://blog.accountant.intuit.com/from-the-experts/preparing-your-clients-for-higher-irs-due-diligence-standards/comment-page-1

(or http://bit.ly/hZochF if you prefer)

Look at it as an opportunity, rather than a threat. Just don't forget to increase your fees where appropriate, to cover any extra time required to protect the client.

[jainen]

>>Higher IRS Due Diligence Standards<<

As usual, I am not much excited about the doom & gloom attitude of financial writers. Section 10.34 of Circ. 230 has been rewritten to say we can't sign a return or give advice we know or should know lacks a reasonable basis or understates the tax. It particularly concerns disclosure of unreasonable positions and tax shelters. Big deal--it only applies if we act willfully, recklessly or through gross incompetence. Apparently the author thinks we should tell our clients to go back to school so that the IRS can't come back on US for being reckless or grossly incompetent. I am confident of my interview skills, but that discussion would be mighty difficult indeed!

Bottom line--this is still a lower standard than what the tax code itself already imposes in Section 6694. The important change is that it now covers unlicensed preparers too, in case they start promoting tax shelters.