Wiley Tax Preparer: A Guide to Form 1040

CHAPTER 38

Preparer Responsibilities and Penalties

Beyond preparing clients' tax returns, a tax return preparer also must understand and comply with e-file procedures, safeguard client information, and comply with other IRS rules and regulations. Tax return preparers also must carefully follow the IRS rules for representing taxpayers.

ALERT: Electronic return originators (EROs) are prohibited from filing pay-stub returns. Pay-stub filing occurs when a preparer prepares and files a tax return for a taxpayer who presents a pay stub instead of Form W-2, Wage and Income Statement. What should a tax return preparer do if a taxpayer says his or her Form W-2 got lost in the mail or was not issued (either by paper or electronically)? Taxpayers should be instructed to contact their employer and request a copy. If the employer will not reissue the form, the taxpayer can file a return with a substitute Form W-2, Form 4852, Substitute for Form W-2, Wage and Tax Statement. However, Form 4852 cannot be filed prior to February 14.

Penalties may be imposed on a tax preparer for actions taken or not taken. Awareness of these penalties and the proper procedures can help a preparer comply with the law and avoid penalties.

Compliance with e-file Procedures

In most cases, the tax preparer must e-file returns, as described in Chapter 37.

Violating e-file procedures, including noncompliance with ...