Everyone in the tax preparation business is aware that only taxpayers are responsible for their tax assessments plus any penalty and interest for late payment. Taxpayer signatures on tax returns constitute approval that information on the forms and schedules is correct as well as complete. The only tax preparer requirements regarding reported details on a tax return involve taking reasonable steps to ascertain the facts and circumstances.
Nevertheless, measures are recommended for documenting all communication with taxpayers. In fact, regulations are imposed on a licensed tax practitioner relating to correspondence. These rules demand that tax professionals inform their clients that opinions may comprise unsupported interpretation of the tax code.
Another aspect of tax agent jobs concerning client communications is not related to IRS provisions. This extra effort by providers of tax services should give clear directions to people about basic taxpayer actions. Preferably, instructions are given in writing. For example, a simple series of steps given with completed tax returns is a sound procedure. This instructs individuals to review and sign their returns plus pay any tax due.
These directives may appear obvious to a certified tax professional but a record of written instructions to clients would certainly aid Dexter Lehtinen, a tax attorney who previously represented the Miccosukee Indian tribe. Members of the tribe now allege that Lehtinen provided inaccurate tax advice. The dispute concerns the action of paying income tax when due.
The Miccosukees are in trouble with the IRS over income tax on the profits of a legal gambling operation. Approximately 250 tribe members have received IRS notices of tax assessments in the millions of dollars. Although payment of the tax is clearly the responsibility of the tribe members rather than Lehtinen, the Miccosukees are suing Lehtinen. They allege that Lehtinen had informed the tribe that none of its members were liable for income tax.
Lehtinen tells the story in reverse. He says that, despite imploring them to pay their taxes, the tribe leaders always informed him that they didn't owe taxes to the federal government because the Miccosukees are a sovereign nation.
To prove his contention is accurate, Lehtinen would only need to present a copy of prior written instructions to tribe members. For now, the confusion appears to have resulted from mistaken understanding of terms by the tribe members. The Miccosukee tribe as a whole owes no tax because of its status as a sovereign nation. However, the tribe's individual members do incur tax liability on their earnings and distributions from the gambling activities of the tribe.
Tribes are required to submit statements of gambling revenue and plans for distribution of gambling profits to tribe members. The Miccosukees contested this regulation in court and lost. The tribe is somewhat like an S corporation. It pays no direct income tax but must report income. In addition, profit distributions to tribal members are subject to tax withholding requirements - which the Miccosukees also ignored. Lehtinen might have less trouble with the tribe if he had explained this clearly in writing and retained a copy.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
Nevertheless, measures are recommended for documenting all communication with taxpayers. In fact, regulations are imposed on a licensed tax practitioner relating to correspondence. These rules demand that tax professionals inform their clients that opinions may comprise unsupported interpretation of the tax code.
Another aspect of tax agent jobs concerning client communications is not related to IRS provisions. This extra effort by providers of tax services should give clear directions to people about basic taxpayer actions. Preferably, instructions are given in writing. For example, a simple series of steps given with completed tax returns is a sound procedure. This instructs individuals to review and sign their returns plus pay any tax due.
These directives may appear obvious to a certified tax professional but a record of written instructions to clients would certainly aid Dexter Lehtinen, a tax attorney who previously represented the Miccosukee Indian tribe. Members of the tribe now allege that Lehtinen provided inaccurate tax advice. The dispute concerns the action of paying income tax when due.
The Miccosukees are in trouble with the IRS over income tax on the profits of a legal gambling operation. Approximately 250 tribe members have received IRS notices of tax assessments in the millions of dollars. Although payment of the tax is clearly the responsibility of the tribe members rather than Lehtinen, the Miccosukees are suing Lehtinen. They allege that Lehtinen had informed the tribe that none of its members were liable for income tax.
Lehtinen tells the story in reverse. He says that, despite imploring them to pay their taxes, the tribe leaders always informed him that they didn't owe taxes to the federal government because the Miccosukees are a sovereign nation.
To prove his contention is accurate, Lehtinen would only need to present a copy of prior written instructions to tribe members. For now, the confusion appears to have resulted from mistaken understanding of terms by the tribe members. The Miccosukee tribe as a whole owes no tax because of its status as a sovereign nation. However, the tribe's individual members do incur tax liability on their earnings and distributions from the gambling activities of the tribe.
Tribes are required to submit statements of gambling revenue and plans for distribution of gambling profits to tribe members. The Miccosukees contested this regulation in court and lost. The tribe is somewhat like an S corporation. It pays no direct income tax but must report income. In addition, profit distributions to tribal members are subject to tax withholding requirements - which the Miccosukees also ignored. Lehtinen might have less trouble with the tribe if he had explained this clearly in writing and retained a copy.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
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