Faculty

Published on October 23, 2008 | by LawNews

Prof. Mitchell Gans Publishes ‘2008 Amendments to Preparer Penalty Rules’ in Steve Leimberg Newsletter

Professor Mitchell Gans wrote an October 22 article for Steve Leimberg’s Estate Planning Email Newsletter on the subject of the tax amendment carried in the recently passed bailout legislation. Gans’ analysis focuses on 6694 of
the Internal Revenue Code, which deals with penalties imposed on practitioners who take unreasonable positions on tax returns or who give unreasonable advice to taxpayers or other preparers about positions to
be taken on a tax return.

EXECUTIVE SUMMARY:
In the recently enacted bailout legislation, the Congress amended the preparer-penalty provisions, which are contained in section 6694 of the Internal Revenue Code. The amendment makes two changes:

First, it confirms the validity of an important aspect of the proposed regulations, under which preparers may qualify for the “substantial-authority” standard rather than the more rigorous, “reasonable belief of a more-likely-than-not” standard contained in the pre-amendment version of the section.

Second, it changes the treatment of tax shelters, imposing a higher standard on preparers in this context than the proposed regulations do.

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