The IRS requires that as part of a professionally prepared tax return that the taxpayer review his\/her return before it is e-filed. This review process is important because the taxpayer is signing under penalties of perjury that the return and accompanying schedules and statements were examined by the taxpayer and to the best of the taxpayer\u2019s knowledge and belief, that the return is true, correct and accurately lists all amounts and sources of income received during the tax year. It also states that the preparer is preparing the return based on the information received from the taxpayer.<\/p>\n
In the tax court case of John J. Sweeney and Donna L. Sweeney v. Commissioner, TC Summary Opinion 2016-32<\/em>, the taxpayers conceded that they failed to include all of their (unreported) income on Schedule C of their return, but contested the imposition of the IRS 20% accuracy-related penalty.<\/p>\n The IRS audit exam resulted because third-party insurance company payers reported more income on Form-MISC than the taxpayer reported on Sch. C as insurance commission income.<\/p>\n The IRS and the court found the taxpayer\u2019s numerous arguments frivolous and without merit. The taxpayer acknowledged that he had received the unreported income and could offer no explanation as to how he arrived at the amount of income shown on his Sch. C. In fact, the taxpayer acknowledged that the reported gross receipts \u201ccouldn\u2019t possibly be right.\u201d<\/p>\n The taxpayers argued that while tracking expenses for the business was relatively easy, tracking commission income was more difficult because of the numerous commission checks that were received. The taxpayers also argued that since they moved several times during the year, they likely never received the 1099s issued by the insurance companies. The court agreed with the IRS that IRC Sec. \u00a76001 requires a taxpayer to keep accurate records of business income and expenses and thus the non-receipt of 1099s is irrelevant. The failure to track commission income was not a good faith effort to determine their tax liability.<\/p>\n The taxpayers then argued that they had reasonable cause for failure to report their commission income because they had relied on their accountant to prepare their return correctly. The court found no merit to this argument as the taxpayers failed to supply their tax preparer with all of the information needed to prepare an accurate return. The court further found that even if they had provided all of the income to the tax preparer, they are still subject to the accuracy-related penalty because they did not act reasonably because they failed to review the completed return before it was filed. <\/em><\/strong><\/p>\n Lesson learned: Always review your tax return before sending it to the IRS. The taxpayer is ultimately always responsible for his\/her return. <\/strong><\/p>\n If you want to discuss your business or personal tax planning<\/a>, tax preparation<\/a> and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601<\/a> today to make an appointment at our Exton PA CPA office<\/a> to discuss your situation. You can also schedule a consultation at Click Here<\/a>.<\/p>\n The IRS requires that as part of a professionally prepared tax return that the taxpayer review his\/her return before it is e-filed. This review process is important because the taxpayer is signing under penalties of perjury that the return and accompanying schedules and statements were examined by the taxpayer and to the best of the […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3],"tags":[],"class_list":{"0":"post-2234","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-irs-tax-planning-ideas-tips-news","7":"entry"},"aioseo_notices":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9W9tf-A2","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/2234","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/comments?post=2234"}],"version-history":[{"count":3,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/2234\/revisions"}],"predecessor-version":[{"id":2237,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/2234\/revisions\/2237"}],"wp:attachment":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/media?parent=2234"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/categories?post=2234"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/tags?post=2234"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Copyright \u00a9 2017 Keystone Financial Solutions, P.C.\u00a0 All rights reserved.\u00a0 BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.<\/strong><\/h6>\n","protected":false},"excerpt":{"rendered":"