my answer is b, is it right? If a tax preparer identifies an error on a prior ye
ID: 2458473 • Letter: M
Question
my answer is b, is it right?
If a tax preparer identifies an error on a prior year tax return --
A. The preparer must immediately disclose the error to the tax authorities in writing or by amended tax return. B. The preparer must immediately disclose the error to the client and then disclose the error to the tax authorities via amended tax return. C. The preparer must immediately disclose the error to the client in writing, the impact of the error, and advise the client of the method to correct the error. The preparer is not obligated to disclose the error to the tax authorities, except under certain circumstances. D. The preparer must immediately disclose the error to the client (either verbally/orally or in writing), the impact of the error, and advise the client of the method to correct the error. The preparer is not obligated to disclose the error to the tax authorities, except under certain circumstances.Explanation / Answer
Under AICPA guidelines for professional practices , it has been clearly instructed that the Tax preparer must inform the taxpayer in the event of any error of prior period return and advise the taxpayer regarding the impact of such error and how to correct the error. Such communication prfereable should be in writing , but if the client does not want in writing it may be done orally with a memo kept in the file of practitioner detailing the descussion. The Tax preparer is not supposed to inform IRS for such error except some specific circumstances ,and it is Tax payer's duty.
Therefore statement D is most appropriate.
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