A tax preparer has advised a company to take a position on its tax return. The tax preparer believes that there is a 75% possibility that the position will be sustained if audited by the IRS. If the position is not sustained, an accuracy-related penalty and a late-payment penalty would apply. What is the tax preparer's responsibility regarding disclosure of the penalty to the company?
A. The tax preparer is responsible for disclosing both penalties to the company.
B. The tax preparer is responsible for disclosing only the accuracy-related penalty to the company.
C. The tax preparer is responsible for disclosing only the late-payment penalty to the company.
D. The tax preparer has no responsibility for disclosing any potential penalties to the company because the position will probably be sustained on audit.
Answer: A. The tax preparer is responsible for disclosing both penalties to the company.
You might also like to view...
Alicia and Arlene run a successful eatery called AA Café. After expanding their operating hours and hiring more workers, their business suddenly dropped off
Upon reevaluating their decision, they feel they should do something. What should be their plan of action? What will be an ideal response?
A number of assumptions about future events must be made regarding a defined benefit plan. Which of the following does not represent one of the assumptions?
a. Interest rates b. Termination date for the firm c. Employee turnover d. Mortality rates e. Compensation