Penalties Against, and Investigations of, Tax Return Preparers, Promoters, and Appraisers

Penalties against paid return preparers and promoters of tax avoidance transactions are an important part of the Service’s enforcement strategy. Most tax professionals make a good faith effort to follow, and help their clients comply with, the law. However, abusive tax professionals undeniably exist, preying on taxpayers and threatening the American system of voluntary tax compliance. Abusive tax professionals can face a litany of civil and criminal penalties, including monetary sanctions, censure, revocation of electronic filing privileges, suspension or disbarment from practice before the Internal Revenue Service (” Service” or” IRS”), enjoinment from providing tax preparation or advisory services, and criminal prosecutions. The Service’s oversight of tax professionals has historically been lacking. But, recent evidence suggests that this trend of non-enforcement may soon be changing.