The IRS is authorized to impose penalties on a return preparer for multiple reasons. The IRS has specifically identified the following situations as shown below;
- a failure to sign a return.
- an understatement of a taxpayer's liability due to unreasonable position.
- an understatement of a taxpayer's liability due to willful or reckless conduct.
- a failure to furnish a copy of a return to a taxpayer.
- a failure to furnish the tax preparer's identifying number.
- a failure to retain required copies or lists.
- a failure to file correct information tax returns.
- the negotiation of check issued to a taxpayer.
- a failure to be diligent in determining a taxpayer's eligibility for the Earned Income Tax Credit.