An "income tax return preparer" is any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax or claim for refund of tax.

Penalties which apply to tax return preparer are:

1. Understating a taxpayer's tax liability when the understatement was due to unrealistic positions _ $250 penalty for each return or claim that shows such understatement. IRC 6694(a)

2. Willful understatement or intentional or reckless conduct _ $1,000 penalty for any return or claim, less any penalty paid under (1) above. IRC 6694(b)

3. Failure to furnish taxpayer a copy of the return or claim by the time such return or claim is presented to the taxpayer for signature _ $50 penalty for each return. The maximum penalty imposed on any person with respect to documents filed during any calendar year shall not exceed $25,000. IRC 6695(a)

4. Preparer not signing a return or claim _ $50 penalty for each return or claim not signed. The maximum penalty imposed on any person with respect to documents filed during any calendar year shall not exceed $25,000. IRC 6695(b)

5. Preparer not providing his/her taxpayer identification number _ $50 penalty for each return or claim not reflecting the taxpayer identification number of the preparer. The maximum penalty imposed on any person with respect to documents filed during any calendar year shall not exceed $25,000. IRC 6695(c)

6. Preparer not keeping a copy or list of returns or claims prepared, for the period ending three years after the close of the return period _ $50 penalty for each failure. The maximum penalty imposed on any person with respect to any return period shall not exceed $25,000. IRC 6695(d)

7. Negotiating or endorsing a federal income tax check issued to a taxpayer _ $500 penalty for each check. IRC 6695(f)

8. Except as otherwise provided by law, disclosure of information furnished to a preparer in connection with the preparation of federal tax returns is subject to a civil penalty of $250 for each such disclosure up to a maximum that shall not exceed $10,000 in a calendar year. Reckless and knowing disclosure, except as otherwise provided by law, of such information is subject to a criminal fine of not more than $1,000, or imprisonment for not more than one year, or both plus the costs of prosecution. IRC 6713

If you receive a bill, refund, or other notice from the Internal Revenue Service, you may call us at your local IRS office for an explanation. The code numbers on the notice you received match the code numbers of the paragraphs below.