New IRS Weapon: Tax Professionals
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.
