Reliable California Enrolled Agents Required to Take Precautions With Deductions

March 25, 2012 by  Filed under: Taxes 

A tax practitioner in Bakersfield, California, should have seriously considered the information covered in an enrolled agent ethics course. Instead, she engaged in efforts to obtain higher refunds for her clients by preparing tax returns with made up information.

This endeavor did not escape the watchful eye of the IRS. The tax preparer claimed that one of her clients is a business owner of a day care center. Various tax deductions were listed that created a business loss. Problems ensued when the client revealed to the IRS that she was never a day care owner.

The California Tax Education Council (CTEC) is responsible for oversight of all tax preparers in the state. But that doesn’t stop some people from becoming bad tax practitioners – until they are caught. California enrolled agents are exempted from state registration because they are regulated by federal mandates. An EA might have less opportunity to escape detection of illegal practices than a CETC registered preparer. So, taxpayers possibly increase their chances of honest tax service when choosing someone with an EA license.

Enrolled agents learn the correct facts to gather for tax returns and they are certainly aware of the prohibitions against making up information. The woman who was falsely listed as a day care owner was apparently reluctant to go along with any scheme to commit fraud on her tax return. The tax preparer is accused of 29 counts of aiding and assisting in the preparation of false tax returns.

Clients other than the alleged day care owner were either all too happy to go along with the tax preparation scams or signed their returns without question. Either way, the tax refunds created on the falsely prepared returns resulted in initially satisfied customers. Unfortunately, individuals are responsible for the accuracy of reporting on their tax returns. The taxpayers are required to remit any underpaid tax liability. They might wisely decide to find an enrolled agent for their future tax work.

In addition, the tax practitioner could pay restitution as well as receive a sentence to federal prison. This is a black eye for the entire tax profession by fueling a public perception of tax preparers as often inaccurate and occasionally crooked. However, the situation is also an opportunity to explain the importance of correctly prepared tax returns. Price should not represent the primary consideration of tax clients.

A tax professional with an enrolled agent certificate can point out the high standards of learning and ethics that accompany the designation. Plus, everyone engaged in tax preparation should offer to explain all deductions and tax credits. When doing so, they should note that scheming tax practitioners don’t provide any opportunity for clarification. Those unethical tax pros are certain to have trouble when the IRS catches them.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Fast Forward Academy is a leading publisher of education for enrolled agent ethics and tax professionals. Access to free questions for the California enrolled agents is available on their website.

Article Source:

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!

You must be logged in to post a comment.

Prev Post:
Next Post: