ETHICS: ENSURE COMPLIANCE TO AVOID SANCTIONS PRESENTED BY: IGNACIO ALEX BURGOS, EA

Procedures, Compliance and Sanctions circular 230 sections procedures ensure compliance touch on current issues corrections consequences

§ 10.52 Violations subject to sanction. (a) A practitioner may be sanctioned under §10.50 if the practitioner — (1) Willfully violates any of the regulations (other than §10.33) contained in this part; or (2) Recklessly or through gross incompetence (within the meaning of §10.51(a)(13)) violates §§ 10.34, 10.35, 10.36 or 10.37. (b) Effective/applicability date. This section is applicable to conduct occurring on or after September 26, 2007.

Sample Penalties 6695 – (a) Failure to furnish copy to taxpayer (b) Failure to sign (c) Failure to furnish identifying number Various fines some have a $25,000 maximum, A-E but not F & G 6701 – Aiding and abetting has a fee of $1,000 / $10,000 if corporate 6713 – Disclosure or use of information by preparers of returns a $250 penalty for each such disclosure or use, but the total amount shall not exceed $10,000 for any calendar year.

Sample Penalties 7206 – Fraudulent statement has a penalty of $100,000 / $500,000 and/or up to 3 years imprisonment 7216 – Disclosure or use of information by return preparers imposes a $1,000 and / or 1year imprisonment plus court cost 7407 – Action to enjoin (prohibit) tax return preparer – loss of livelihood resulting from injunctive action due the conduct that was contrary to code and other fraudulent or deceptive conduct

§ 10.36 Procedures to ensure compliance. (a) Any individual subject to the provisions of this part who has (or individuals who have or share) principal authority and responsibility for overseeing a firm’s practice governed by this part, including the provision of advice concerning Federal tax matters and preparation of tax returns, claims for refund, or other documents for submission to the Internal Revenue Service, must take reasonable steps to ensure that the firm has adequate procedures in effect for all members, associates, and employees for purposes of complying with subparts A, B, and C of this part, as applicable.

Ensure Adequate Procedures FTC Standards for Safeguarding Customer Information Rule (16 CFR Part 314) This Rule requires that financial institutions develop, implement and maintain an Information Security Program.

Ensure Adequate Procedures Employee hand books PROCEDURE HAND OUTS POST POSTERS DAILY REMINDERS EMAIL DAILY HANDOUTS

Compliance: acquiescence, agreement, obedience, submission, amenability, willingness, agreement, acceptance

Ensure Compliance Employee hand books procedure hand outs post posters daily reminders email daily handouts

Ensure Compliance Are there procedures RETURNS MEDIA DOCUMENTS MAILED EMAILED

data breach Hard copies computers Networks Latest Buzz data breach Hard copies computers Networks PHISHING EMAILS, ATTACHMENTS SCAMS PHONE - IRS IMPOSTERS PRIVATE COLLECTORS DIRECT EMAIL – FAKE IRS LETTERS

Latest Buzz Courtesy of Iowa State University

Ensure Procedures are Being Followed Monitor Discuss

Correct Noncompliance Take action FORMER PREPARER LESTER MORRISON, PLEADED GUILTY IN 2010 OF ORCHESTRATING A LARGE-SCALE TAX FRAUD IS BANNED FROM WORKING AS A FEDERAL INCOME TAX RETURN PREPARER ENGAGING IN ANY CONDUCT INTERFERING WITH THE FEDERAL TAX LAWS.

Correct Noncompliance from 2000 - 2008 he and his associates 4 ea. prepared thousands of false and fraudulent returns through a prep business located in two states USED IMPROPER DEDUCTIONS, CLAIMED LOSSES FOR PHONY BUSINESSESS. USED DECEASED CHILDREN STOLEN IDs TO CLAIM DEPENDENT DEDUCTIONS CAUSED $28 MILLION IN TAX REFUNDS AND LIED TO INVESTIGATORS SENTENCED TO 72 MONTHS IN PRISON AND ORDERED TO PAY $17.3 MILLION IN RESTITUTION TO THE IRS

Preparer Eliana Sarmiento, formerly with K&S Tax Solution Correct Noncompliance Preparer Eliana Sarmiento, formerly with K&S Tax Solution FOUND GUILTY OF MULTIPLE CHARGES IN SCHEMES TO FILE FRADULENT RETURNS HER AND 14 OTHER CO-WORKERS STOLE MORE THAN $19 MILLION IN REFUNDS FILED FALSE RETURNS WITH STOLEN IDs FROM RESIDENTS OF PUERTO RICO $281,348,627 IN ATTEMPTED FRAUDULENT RETURNS AND $19,799,175 IN TREASURY FUNDS STOLEN

two counts of theft of public funds, each a maximum 10 years in prison Correct Noncompliance two counts of theft of public funds, each a maximum 10 years in prison TWO COUNTS OF CONSPIRING TO STEAL PUBLIC FUNDS, EACH A MAXIMUM OF FIVE YEARS IN PRISON AND TWO COUNTS OF AGGRAVATED ID THEFT , EACH A MANDATORY TWO YEARS IN PRISON

WHAT IF? Forward emails to PHISHING@IRS.GOV. Phone Scams - IRS Imposters – HTTPS://WWW.TREASURY.GOV/TIGTA/CONTACT_REPORT_SCAM.SHTML HTTPS://WWW.FTCCOMPLAINTASSISTANT.GOV/#&PANEL1-1

WHAT IF? Call IRS 800.829.1040 Want iTunes card – Call Apple Support at 1-800-275-2273 FOR MORE INFO IRS PUB 4557 Safeguarding Taxpayer Data - CHECKLIST Safeguard.data.tp@irs.gov - FOR COMMENTS OR SUGGESTIONS

SUMMARY circular 230 sections procedures ensure compliance touch on current issues corrections consequences CONTACT INFORMATION