New IRS Weapon: Tax Professionals
Posted Jul 11, 2007 8:28 PM CDT
By Martha Neil
New IRS rules that hold accountants, lawyers and others who prepare tax returns more accountable for client errors are changing the way some practice and may be driving a wedge between client and professional.
Tax professionals now at least arguably have more accountability than their clients for filing a problematic return under a new law that took effect in May, and this means many are asking for more documentation from clients--as well as heftier fees, the Wall Street Journal (sub. req.) reports. As a result, some clients are deciding to file questionable returns themselves, rather than ask a tax pro to do so.
That has happened, for instance, to Claudia Hill, who owns a tax-services firm in Cupertino, California. Plus, a new issue has arisen: to avoid disclosure issues, one client has asked her to "consult" on, rather than "prepare" his tax return. And that means still more work for her: "I have to figure out at what point advice I give about a return becomes 'return preparation,' " she tells the newspaper.