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IRS fines tax practitioner for “false and misleading advertising”

The Internal Revenue Service (IRS) recently concluded an investigation of a tax preparation professional. The investigation resulted in various allegations, including violation of the professional rules of conduct.

More specifically, the agency accused the tax practitioner of violating Treasury Department Circular No. 230. The government does not allow tax practitioners to use “public or private communication that contains false, fraudulent, coercive, misleading or deceptive statements.” The agency accused the practitioner of creating flyers that misled clients into believing he worked with a team of certified public accountants, attorneys and former IRS employees to help thousands of taxpayers. In reality, the practitioner was the only agent at the firm.

The IRS also stated the practitioner misled clients into thinking his services were the only chance they had to resolve their tax issues because of alleged misconduct amongst IRS employees.

The practitioner agreed to settle the matter with the IRS. The settlement includes five years of probation and a 12-month suspension. The practitioner will also pay a monetary penalty. The IRS will calculate the penalty based on a percentage of the income resulting from the alleged misconduct.

It is not uncommon for tax practitioners that find themselves under investigation by the IRS. It is also common for the agency to pressure these professionals into a settlement. Do not agree to a settlement before you understand your rights. Ideally, it is best to contact an attorney as soon as you are aware of an investigation. An attorney experienced in these matters can provide valuable representation to help better ensure your professional and personal reputation is protected.

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