Filing DO NOTs as a Tax Preparer

When preparing tax returns for small businesses, tax preparers must adhere to strict ethical and legal standards to avoid serious consequences, including penalties, fines, or even legal action. Here are critical "do nots" that tax preparers should always keep in mind to maintain professionalism and compliance:

Do Not Misrepresent Information

1. Do Not File False Amounts: Never knowingly prepare a return that includes false or misleading information. Filing false amounts, whether inflating expenses or understating income, can lead to audits, penalties, and potential criminal charges for both the preparer and the client. Accuracy is paramount.

2. Do Not Omit Income: All income, regardless of source or amount, must be reported. Omitting income, whether intentionally or by oversight, can result in significant penalties and interest on unpaid taxes, and potentially more severe consequences if deemed fraudulent.

Do Not Overstep Professional Boundaries

3. Do Not Claim Unsubstantiated Deductions: Only claim deductions and credits that have clear supporting documentation. Advising clients to claim exaggerated or false deductions to reduce their tax liability is unethical and illegal.

4. Do Not Ignore Client Documentation: If a client fails to provide adequate documentation for expenses or income, do not proceed with assumptions or estimates that cannot be substantiated. Encourage clients to maintain comprehensive records and provide all necessary documents before filing.

Do Not Disregard Legal and Regulatory Requirements

5. Do Not Disregard Filing Deadlines: Missing filing deadlines can result in late filing penalties and interest charges for your clients. Always be aware of the tax calendar and encourage clients to provide their information timely.

6. Do Not Neglect Continuing Education: Tax laws change frequently, and staying informed through continuing education is essential for providing accurate and lawful service. Neglecting to keep up with new tax laws and regulations can lead to erroneous filings and potential liability issues.

7. Do Not Engage in Conflicts of Interest: Maintain professional integrity by avoiding any actions that could benefit you at the expense of your client. Always act in the best interest of the client within the bounds of the law.

Do Not Jeopardize Client Relationships

8. Do Not Misuse Client Information: Handle all client information with the utmost confidentiality and security. Unauthorized sharing of client data not only violates privacy laws but can also damage your professional reputation.

9. Do Not Overpromise Outcomes: Be honest with clients about potential outcomes and never guarantee specific tax results, as many aspects of tax filing depend on individual circumstances and IRS decision-making.

10. Do Not Rush Through Preparations: While working efficiently is important, rushing through tax return preparation increases the likelihood of errors. Take the necessary time to review all aspects of the return thoroughly.