In Uncategorized on 08/29/2017 at 17:05

Nails the 8867 Prep Failure with a 6695(g)

If the above is utterly incomprehensible to you, my heartiest congratulations! You’re a human being and not engaged in tax preparation, tax consultation, tax controversy, or anything more complicated than handing your friendly neighborhood zombie who does this stuff the shoebox and the check.

Alas, that’s not the story of Abdiwali Suldan Mohamed, 2017 T. C. Sum. Op. 69, filed 8/29/17. Abs is a CPA in WA, and prepares a lot of returns. High on his faves list is the Schedule EIC, with accompanying 1040 or subset.

Well, Abs is a prep, but not a perp, as CID pays him a courtesy call and clears him of actual criminality.

However, some of Abs’ 300 clients for the years at issue got hit with audits, causing Abs to be visited by a TCO. That’s a tax compliance officer, who gigged Abs for missing or defective 8867 Paid Preparer’s Due Diligence Checklist, which Abs was supposed to fill out in extenso and grapple to his soul with hoops of steel for ever so many years.

Abs and the TCO hashed it out, and the TCO gigged Abs for 20 out of the original 50 sketchy 8867s. Nothing daunted, Abs went to Appeals, did some other and further slicing-and-dicing, and got the 20 unrighteous reduced to 14. Only Abraham did better with the Cities of the Plain.

Meantime, “(T)he TCO prepared a Form 8484, Report of Suspected Practitioner Misconduct and Report of Appraiser Penalty, for submission to the Office of Professional Responsibility (OPR).  The TCO attached to the Form 8484 a copy of the audit report.  …(T)he TCO’s acting immediate supervisor attached her digital signature to ‘Part E-Management Approval’ of the Form 8484.” 2017 T. C. Sum. Op. 69, at p. 4.

After Appeals had done, the AO sent Abs a letter telling him he was up for a $7K Section 6695(g) prep chop (14 defectives at $500 a throw). He could pay and sue for a refund in USDC or USCFC.

Abs did neither, waited for the NITL, and petitioned. STJ Daniel A. (“Yuda”) Guy got this one.

OK, Abs wanted to relitigate liability, but he had had two shots at that and won both, sort of. “Third time lucky” doesn’t play in a CDP. One swing at the cliché is all you get.

Nothing new here, so why the story?

Well, where’s the 6751(b) Boss Hoss sign-off on the 6695(g) chops raining down on Abs?

STJ Yuda will tell us.

“Respondent avers that the TCO’s (acting) immediate supervisor approved the initial determination to impose 20 section 6695(g) penalties on petitioner when she signed the Form 8484 and approved the referral of the matter, including the audit report, to the OPR. We agree with respondent.” 2017 T. C. Sum. Op. 69, at p. 13. Footnote omitted, but it’s interesting.

“Respondent did not offer a Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties, which normally is used to assert preparer penalties. Internal Revenue Manual (IRM) pt. (May 16, 2012).” 2017 T. C. Sum. Op. 69, at p. 13, Footnote 6.

So the 6751(b) Boss Hoss (sorry, acting Boss Hoss) chop clearance can take whatever form IRS likes?

Of course, this is a non-appealable, nonprecedential small-claimer, so why sweat it?

Well, in the first place add a zero. Abs probably had to do a lot of EITCs to get $7K in fees, maybe in great haste in late March and early April. As much work as my expensive colleagues have to do in ten or twelve hours of researching the law on Advance Payment Agreements.

And that Schedule EIC and 1040A involves “…a 17-part test, accompanied by a mandatory cross-examination worthy of Clarence Darrow in his prime, to provide what is claimed to be tax relief for, but is really welfare to, (presumably) the poorest in our society….” See my blogpost “The $500 Misunderstanding,” 10/25/11, for the full rant.

But this is a nonpolitical blog.


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