represent the taxpayer before revenue agents,
customer service representatives or similar officers and employees of the
Internal Revenue Service during an examination of the taxable year or period
covered by that tax return. However, this right does not permit such
individual to represent the taxpayer before the appeals officers, revenue
officers, counsel or similar officers or employees of the Internal Revenue
Service.
A practitioner must, on a proper and lawful
request by a duly authorized officer or employee of the Internal
Revenue Service, promptly submit records or information in any
matter before the Internal Revenue Service. The individual can
decline and notify the IRS that he or she as a practitioner believes in good
faith and on reasonable grounds that the records or information are
privileged.
Penalty Information for
Authorized IRSe-fileProviders
A penalty may be imposed on a return preparer who
endorses or negotiates a refund check issued to any taxpayer other than the
return preparer. The amounts can add up since there is a penalty of $500 for
each check endorsed. The prohibition on return preparers negotiating a
refund check is limited to a refund check for return they prepared.
Preparer penalties may be asserted against an
individual or firm meeting the definition of a tax preparer under I.R.C.
§7701(a)(36) and Treas. Reg. §301.7701-15. Preparer penalties that may be
asserted under appropriate circumstances include, but are not limited to,
those set forth in I.R.C. §§ 6694, 6695, 6701 and 6713.
Under §301.7701-15(c), Providers are not tax return
preparers for the purpose of assessing most preparer penalties as long as
their services are limited to "typing, reproduction or other mechanical
assistance in the preparation of a return or claim for refund". If an ERO,
Intermediate Service Provider, Transmitter or the product of a Software
Developer alters the return information in a non-substantive way, this
alteration is considered to come under the "mechanical assistance" exception
described in §301.7701-15(c). A non-substantive change is a correction or
change limited to a transposition error, misplaced entry, spelling error or
arithmetic correction.
If an ERO, Intermediate Service Provider,
Transmitter or the product of a Software Developer alters the return in a
way that does not come under the "mechanical assistance" exception, the IRS
may hold the Provider liable for income tax return preparer penalties. See
Treas. Reg.§301.7701-15(c); Rev. Rul. 85-189, 1985-2 C.B. 341 (which
describes a situation where the Software Developer was determined to be an
tax return preparer and subject to certain preparer penalties).
A $500 penalty may be imposed, per I.R.C. §6695(f),
on a return preparer who endorses or negotiates a refund check issued to any
taxpayer other than the return preparer. The prohibition on return preparers
negotiating a refund check is limited to a refund check for returns they
prepared.
A preparer that is also a financial institution,
but has not made a loan to the taxpayer on the basis of the taxpayer’s
anticipated refund, maycash a refund check and remit all of the
cash to the taxpayer, accept
a refund check for deposit in full to a taxpayer’s account provided the bank
does not initially endorse or
