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IRS elevates appraisers to "nonsigning tax return preparers" status

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Elliott

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Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
From AI online newsletter:

Proposed IRS Regulations May Have Substantial Impact on Appraisers
Appraisers who provide their services in connection with the filing of federal tax returns may be affected by recently proposed regulations. Under a proposed rule released in June by the Internal Revenue Service, appraisers could be considered "nonsigning tax return preparers" under certain circumstances, making them subject to new IRS penalties.

I don't know what a "nonsigning tax return preparers" is, but it doesn't sound
good. Story goes on to talk about Erin Toll and Colorado's issues with conservation
easements. Could 'learn to burn' be far behind?
 

jay trotta

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Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
IRS Issues Proposed Regulations on Tax Return Preparer Penalties (NPRM REG-129243-07)
CCH (cch.taxgroup.com) reports:

After months of speculation, the IRS on June 16 released proposed return preparer penalty regulations. The proposed regulations, the IRS explained, do not only provide guidance on the new Code Sec. 6694(a) more-likely-than-not preparer standard, they also contain a comprehensive overhaul of all preparer penalties. The IRS predicted that final regulations will be in place for the 2009 filing season. A hearing on the proposed regulations is scheduled for August 18, 2008, at the IRS National Office in Washington, D.C.

In welcome news to practitioners, the IRS stated that it will not stack penalties under Code Sec. 6694 and Circular 230 (TAXDAY, 2007/10/09, M.2) and reiterated that penalties under Code Sec. 6694 are not automatic (TAXDAY, 2008/03/07, I.9). Additionally, the IRS included many examples of various provisions in the proposed regulations.

Pending legislation could make the proposed regulations obsolete before they are finalized, Thomas Ochsenschlager, Vice President, Taxation, American Institute of Certified Public Accountants (AICPA), told CCH. The House-passed Renewable Energy and Job Creation Bill of 2008 (HR 6049) would equalize the preparer and taxpayer penalty standards at substantial authority (TAXDAY, 2008/05/22, C.1). Although Senate Democrats were unable to bring HR 6049 before the full Senate for debate during the week of June 9, they are expected to try again the week of June 16.

"In an initial review of the proposed regs, I'm pleased to see that the examples include a number of preparation-based scenarios, which are indeed welcome to enrolled agents and, I think, to many in the Circular 230 community at large," Robert A. Kerr, senior director of government relations for the National Association of Enrolled Agents (NAEA) told CCH.

"The proposed regs are likely to generate an avalanche of comment on the lack of certainty about how to determine the amount of the penalty," Kip Dellinger, chair of the AICPA Tax Division's Tax Practice Responsibilities Committee, told CCH. Dellinger, who is author of CCH's The Practical Guide to Federal Tax Practice Standards, also predicted that the legal community will "seek more bright-line guidance on who is a nonsigning preparer."

Sea Change in 2007

Passage of the Small Business and Work Opportunity Tax Act of 2007 (2007 Small Business Tax Act) (P.L. 110-28), sparked the drafting of the proposed regulations. The new law replaced the "realistic possibility of success standard" in Code Sec. 6694(a) with the heightened "more likely than not standard" for nonabusive undisclosed positions. The preparer must have a reasonable belief that the tax treatment of the position would more likely than not be sustained on its merits.

The 2007 Small Business Tax Act also extended Code Sec. 6694 to preparers of all returns and not just preparers of income tax returns. Additionally, the new law significantly increased the penalties for noncompliance. The old, first-tier $250 penalty in Code Sec. 6694(a) jumped to the greater of $1,000 or 50 percent of the income derived, or to be derived, by the preparer. The penalty for willful or reckless conduct in Code Sec. 6694(b) increased from $1,000 to the greater of $5,000 or 50 percent of the income


Picked this off, so you can see it (a portion) - it appears to be geared more for Tax Preparers....not quite sure about it, but it's still under Review anyway
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Next thing they'll want is for appraisers to be responsible for failed foreign policy.
 

Elliott

Thread Starter
Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Mike,
I think its sufficient that we are responsible for the whole and
complete subprime/alt-a mortgage/foreclosure/$12 trillion decline
in real estate values/$5 gasoline mess. Other than that, its
just piling on.
 

Mike Phillips

Senior Member
Joined
Dec 16, 2004
Professional Status
Certified Residential Appraiser
State
Florida
I was curious because I prepare returns.

Try this site: http://www.calt.iastate.edu/preparer.html (long-winded and boring as hell but it might be relevant)

from the above -

Who Is a “Tax Return Preparer”

The proposed regulations define signing and non-signing return preparers in Prop. Treas. Reg. §§ 301.7701-15(b)(1) and (2). A signer is any preparer who signs a return. A non-signer is defined as someone who prepares "all or a substantial portion" of a return relating to events that already occurred when advice was given. The proposed regulations adopt a safe harbor which ignores time spent on a position leading to an understatement that was less than five percent of the aggregate advice time.
 

c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
I have no idea what this means for us. In what circumstances would I be considered a non-signing tax return preparer? When I do my own taxes? Or when I don't do someone else's?
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
Gosh! I feel like George Bush! He gets blamed for everything.
 

PL1957

Senior Member
Joined
Jul 19, 2004
Professional Status
Certified General Appraiser
State
Illinois
I have no idea what this means for us. In what circumstances would I be considered a non-signing tax return preparer? When I do my own taxes? Or when I don't do someone else's?
I think it would be when you prepare an appraisal that will be a significant part of the return.
 

c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
Ah, thats nice. I wonder if I can get paid for this additional liability? Don't answer that. I already know the answer.
 

PL1957

Senior Member
Joined
Jul 19, 2004
Professional Status
Certified General Appraiser
State
Illinois
Ah, thats nice. I wonder if I can get paid for this additional liability? Don't answer that. I already know the answer.
If you're doing work that being used for IRS purposes, you've been carrying the liability already. Just read the fine print ...
 
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