Only April 15th of 2021, a good client showed up in the office with all of his tax information. His family are very good and long-term clients of the firm. Your senior tax partner has done the family business and personal returns for many years. The firm sent out the client input (information) sheet for the 2020 tax year and he brought in to the office. He asked if his return could be done that day as he was going out of town and didn't really want to have to worry about the return. Everything was in order except he listed a withdrawal from an IRS of $200,000 and noted that the 1099B was lost. The senior partner questioned him about it and he indicated that he can't find it but knows it was $200,000 and detailed exactly what he used the funds for. The partner asked if they could retrieve it on-line but the client indicated it was a small investment firm and they didn't have it available because he called them in the morning and they said they could only send him a copy. The partner prepared the return as he was satisfied with the information provided. Shortly thereafter the client received a notice from the IRS because the actual amount was $800,000. The client paid the additional tax, penalties and interest and then retain a law firm (Bill & Board Lawyers, LLP). They sued the firm for the additional tax, interest and penalties claiming: 1) The partner was negligent in failing to use due diligence in preparing the return - specifically that he should not have prepared it without the 1099B. 2) The partner was negligent in failing to inform the client about information return matching and that the IRS would match the 1099B to what he reported. He claims that if he had known, he would have told the partner the truth. Comment on the issues using the SSTS and Circular 230. Only April 15th of 2021, a good client showed up in the office with all of his tax information. His family are very good and long-term clients of the firm. Your senior tax partner has done the family business and personal returns for many years. The firm sent out the client input (information) sheet for the 2020 tax year and he brought in to the office. He asked if his return could be done that day as he was going out of town and didn't really want to have to worry about the return. Everything was in order except he listed a withdrawal from an IRS of $200,000 and noted that the 1099B was lost. The senior partner questioned him about it and he indicated that he can't find it but knows it was $200,000 and detailed exactly what he used the funds for. The partner asked if they could retrieve it on-line but the client indicated it was a small investment firm and they didn't have it available because he called them in the morning and they said they could only send him a copy. The partner prepared the return as he was satisfied with the information provided. Shortly thereafter the client received a notice from the IRS because the actual amount was $800,000. The client paid the additional tax, penalties and interest and then retain a law firm (Bill & Board Lawyers, LLP). They sued the firm for the additional tax, interest and penalties claiming: 1) The partner was negligent in failing to use due diligence in preparing the return - specifically that he should not have prepared it without the 1099B. 2) The partner was negligent in failing to inform the client about information return matching and that the IRS would match the 1099B to what he reported. He claims that if he had known, he would have told the partner the truth. Comment on the issues using the SSTS and Circular 230
