EESA Provision Equalizes Reporting Standards for Taxpayers and Tax Preparers
The AIPCA applauded Congress last week for passing a new law equalizing the
tax return reporting standards for taxpayers and tax preparers. The legislation was part of the financial markets rescue package signed into law on Oct. 3. In 2007, Congress passed a law that raised the penalty threshold applying to tax preparers to a level above the threshold applying to taxpayers. The potential conflict of interest between a tax preparer and taxpayer would have arisen in situations where the taxpayer had “substantial authority” for a tax return position, but the tax preparer could not reasonably meet the “more likely than not” standard, according to Tom Ochsenschlager, AICPA vice president of taxation. In such a situation, the taxpayer would not have been required to disclose the position to avoid a penalty, but the preparer would only have been protected from potential IRS penalties if the taxpayer made the disclosure. The law Congress just passed Oct. 3 generally equalizes the undisclosed tax reporting standard for both taxpayers and tax preparers at the more workable threshold of “substantial authority.”
