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socrateaser
socrateaser, Lawyer
Category: Tax
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Experience:  Retired (mostly)
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What happens in the case of an IRS audit of a client serviced

Customer Question

What happens in the case of an IRS audit of a client serviced by a public accountant, where the managing tax partner/ return signer has forced the staff accountant to ignore undeductible expenses and otherwise assist him in preparing a questionable return? Can the IRS proceed against the staff involved, or does the responsiblity lie with the reviewers and signers of the return?
Submitted: 1 year ago.
Category: Tax
Expert:  socrateaser replied 1 year ago.
The IRS can extend liability to any person who knowingly aids a taxpayer in evading his or her tax obligations. IRC § 7201. The issue for the government is whether or not an individual acted with knowledge that the tax return contained false statements.

However, such cases must be proved beyond all reasonable doubt, and the IRS does not prosecute persons for criminal tax evasion without a very good case, because the cost of prosecution is very expensive, and it doesn't usually make sense to bring criminal charges, since the goal is to collect taxes, and convicted criminals do not pay much in taxes, because they can't work for a living while sitting in jail (and, they lose their license if they are a professional, etc.).

So, the answer is "yes," the IRS could proceed against the staff -- but, it's not very likely. Usually, proceeding against the taxpayer is sufficient.

Hope this helps.
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 34634
Experience: Retired (mostly)
socrateaser and 2 other Tax Specialists are ready to help you
Expert:  socrateaser replied 1 year ago.

Hello again,

I see that you rated my service as "OK." Experience tells me that customers who rate at this level are generally not entirely satisfied with the service received. If you require further clarification or assistance with this question, please let me know and I will try to help.

Note: Please do not reply to this memo, unless you actually have a follow-up question. Otherwise, the system will force me to respond, even if you are simply saying, "no thanks."

Best wishes.

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socrateaser
socrateaser
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