The memos reflect the expanded application of the preparer penalties under IRC [section][section] 6694 and 6695 as amended by the Small Business and Work Opportunity Tax Act of 2007 (PL 110-28) to other types of tax returns and claims for refunds besides income taxes.
In addition, the revised preparer standards for recommending tax positions are generally retroactive and thus replace the initial changes that were effective May 25, 2007, contained in the Small Business and Work Opportunity Tax Act of 2007.
SBWOTA A provision from the Small Business and Work Opportunity Tax Act of 2007 (1) (SBWOTA) that affected all taxpayers (including partnerships and their partners as well as tax practitioners) was the expansion of Sec.
6694 tax return preparer penalty rules have been greatly improved by the change to the substantial authority standard made by the Tax Extenders Act and through changes made as a result of public comments about the proposed regulations, the rules still represent a radical departure from those in place prior to the passage of the Small Business and Work Opportunity Tax Act of 2007.
In May, the Small Business and Work Opportunity Tax Act of 2007 amended IRC section 6694(a) to provide higher penalties for tax practitioners who prepare a return or refund claim reflecting an undisclosed unreasonable position.
