Accuracy Related Tax Penalty

Accuracy Related Tax Penalty

Tax preparation is not simple or easy. Too many people choose to do their own personal tax preparation without the proper knowledge of tax code and/or a familiarity of recent tax code changes. In addition, even CPA’s and other IRS professionals very often make costly errors due to a failure of staying abreast of ever changing tax laws and failure to address minor yet very important things in regards to the details.

The IRS will usually catch these errors and the taxpayer will then be subjected to an Accuracy Related IRS Penalty.

Accuracy Related Tax Penalty

Not only will the IRS adjust the IRS return once the error is caught and bill the taxpayer for the difference that the error was responsible for, but they will also include in the new IRS bill, an Accuracy Related Penalty. Depending on the significance of the error, the penalty could be quite large.

If the error is a large misstatement of property valuation or a blatant disregard for tax codes and regulation, the heftiest penalty of up to 40% will be assessed. Depending on the type of error, a variety of other rules may be applied.

These penalties may be waved depending on circumstances. Hire a Tax Professional to help you determine your realistic possibilities for resolution of this penalty. A reputable Enrolled Agent will happily discuss your details with you and then provide you with a realistic expectation in IRS resolution.

Ideally, it would be wise to avoid an Accuracy Related Tax Penalty (and most, if not all other penalties as well) by hiring a tax professional to maximize your deductions in a way that will not risk an audit or negative reactions/responses from the IRS. Saving the small amount of money a tax professional charges, too often wastes your own time and costs you more money.

What Tax Professional Is Right For You?

Many options are available to taxpayers when it comes to choosing a professional to handle your tax issues. The most popular tax professionals to choose from are CPAs, tax attorney and Enrolled Agents.

CPAs: CPAs are accountants who specialize in bookkeeping. They will sometimes do tax preparation, IRS resolution, financial planning and financial consulting on the side.

Tax Attorneys: Tax attorneys are attorneys with a focus on courtroom procedures and representation in tax law. They tend to be very expensive charging by the hour and are only necessary if you are being accused of a crime like tax fraud or evasion.

Enrolled Agent: Enrolled Agents are the only tax professional regulated, monitored and licensed directly by the IRS. In order to maintain their license, Enrolled Agents must stay abreast of tax code updates and changes through continuing education. Enrolled Agents focus of tax and usually do not clutter their tax desk with side business. An Enrolled Agent is working with clients on dedicated tax issues every day.