IRS Warns Preparers About Schedule C Accuracy

Posted By on Jan 11, 2015 | 0 comments

The IRS is said to have sent thousands of notices to tax preparers warning them of potential errors the IRS found on tax returns they filed of business owners. Specifically the IRS identified the Schedule C form, which is used to report business income and losses for a sole proprietor.

The IRS reminded these preparers that they must take specific steps to review and assess the accuracy of the tax returns they prepare for clients. The letter was sent by the IRS’s Director of the Return Preparer Office and informed them that the IRS had “found that many have a high percentage of traits we believe typically indicate errors on Form 1040, Schedule C, Profit or Loss from Business (Sole Proprietorship). This letter reminds you of your responsibilities in this area and provides educational assistance. As a paid preparer, you are responsible for ensuring your clients’ returns are accurate. We ask that you pay special attention to these schedules next filing season.”

The Director reminded these preparers that they are obligated to prepare accurate tax returns and be familiar with “the applicable tax law to establish the relevance and reasonableness of income, credits, expenses, and deductions on a return.”

Director Campbell went on to advise “In general, you can rely in good faith without verification on information your client provides,” Campbell noted. “However, you can’t ignore the implication of the information you have. You must make reasonable inquiries if the information appears to be incorrect, inconsistent or incomplete.”

The fact that Campbell additionally warned about consequences for both the preparer and taxpayer highlights the importance of using a credible and knowledgeable tax preparer. She added that “We’ll be looking for improvement in future returns you prepare”. Visit our home page and select your area to find a top-notch tax preparer who will provide you with an accurate tax return.

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