Treasury Suggests Congress Cut Us a Break

On February 4, 2008 as part of President Bush's proposed fiscal 2009 budget, Treasury suggested that Congress give tax return preparers a break.  Realizing the potential conflict between the client taxpayer and the preparer the Treasury made the following proposal: “The standard applicable to preparers when taking a position not disclosed on a return would be the substantial authority standard. Because the determination as to whether a transaction has a significant purpose of tax avoidance or evasion is inherently subjective to the taxpayer, the preparer standard applicable to tax shelters would also be substantial authority. However, a preparer would be required to have a reasonable belief that the position would more likely than not be sustained on the merits when taking a position with respect to a transaction determined to have a potential for tax avoidance or evasion to which section 6662A applies. The standard applicable to preparers for disclosed positions would remain at reasonable basis. No penalty would be asserted against a preparer if the preparer has reasonable cause and good faith. The proposal would be effective for returns prepared after January 1, 2008.”

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