discussion questions

Respond to the following in a minimum of 175 words:

Share your understanding of a tax preparer’s professional responsibilities. What penalties, if any, can accrue to a tax preparer who makes errors on a company’s tax return? Does intent (malicious vs. accidental) change those penalties?

Linda Duerr-Webb

Tax preparation professionals have many duties that they must follow when completing taxes whether it is for business or personal taxes. Some of these responsibilities include:

> Making sure that their clients do not overpay in taxes/ get back all that is due to them.

> Review all financial documents to get the most accurate filing possible, some documents may be income statements or W-2’s.

> Talk with the clients to make sure that they have an accurate picture of the financial situation (filings status).

> Check past returns and make sure that the amounts are correct.

> If there is an especially difficult tax return then the professional should consult tax law handbooks (either physical or online).

> There should be a copy of the completed return given to the customer. (1)

If a preparer understates a taxpayer’s liability then the punishment is $1,000 or 50% of the income the the preparer receives if it is done an unreasonable position.If the act was done willfully or with reckless conduct then the fine is $5,000 or 75% of the revenue received. (2)

https://www.americasjobexchange.com/tax-preparer-job-description

https://www.irs.gov/tax-professionals/summary-of-p…

Brittany Hanson

“Share your understanding of a tax preparer’s professional responsibilities. What penalties, if any, can accrue to a tax preparer who makes errors on a company’s tax return? Does intent (malicious vs. accidental) change those penalties?”

Tax Preparer’s have a number of professional responsibilities, which include things such as gathering the financial documents and important information from their clients, complete the tax forms, and calculate the amount of taxes owed or due to their clients. Today, most tax preparers are using computer software that helps to simplify the process of entering and calculating the financial data. There are penalties that are involved for the Tax Preparer if information is incorrect or missing – for example, an understatement within the forms related to intentional or reckless behavior leads to a penalty of $5000 or 75% of the his/her earnings from the tax preparation, and a penalty due to unreasonable positions leads to a lesser penalty of $1000 or 50% of their earnings derived from the service, whichever is greater. While there are penalties that can arise from tax preparation, the Tax Preparer is only able to include in the form what is provided, thus it is imperative that she interview her clients well and gather every bit of information possible to avoid any misstatements or missing information.

Discuss with your team the following case study:

Client X offers a generous employee compensation package that includes employee stock options. The exercise price has always been equal to the market price of the stock at the date of grant. The corporate controller, John Jones, believes that employee stock options, like all obligations to issue the corporation’s own stock, are equity. The new staff accountant, Marcy Means, disagrees. Marcy argues that when a company issues stock for less than current value, the value of preexisting stockholders’ shares is diluted.

Pretend you are hired to debate the issue of the proper treatment of options written on a company’s own stock.

Writea team paper response in which you address the following requirements:

Describe how Client X should account for its employee stock option plan under existing GAAP.

Write a summary of your argument, citing concepts and definitions to buttress your case, assuming:

You are siding with John.