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I believe it is best to advise the client to pay as soon as you determine the liability if they wish to minimize interest and penalties.

The $5,000 penalty falls under sec. 6694(b) for understatement due to willful or reckless conduct on behalf of the preparer. Have you seen an actual "Reasonable Compensation" case where sec 6694(b) was imposed on the preparer? I have not. I cannot answer that. What I did find a bit concerning is the presenter in the webinar gave the story of the CPA/Preparer did get the penalized under 6694(b) for each year mentioned. However, there was not any court case cited to back up the story. I'm sure the penalties are highly possible but was this a real case???? Not sure, but stuff like this really gets my attention to make sure I'm in complete compliance.

Good policy!

And you don't want the smoking gun pointed at you when client gets extra months of late filing penalties due to waiting to efile on an unknown date in January. My advice is to file by mail ASAP, don't sit on it.

It is actually a well written document with a table of contents, chapter summaries, checklist, flowcharts and examples. About 30 minutes to get a good grasp. Or corporation or entity registered with Sec. Of State (page 2) unless exceptions are met (page 4). One takeaway is the filing deadlines: "If your company already exists as of January 1, 2024, it must file its initial BOI report by January 1, 2025. If your company is created or registered to do business in the United States on or after January 1, 2024, and before January 1, 2025,..."

Click on English in link to download pdf guide. https://www.fincen.gov/boi/small-entity-compliance-guide

No it just stops late payment penalties.

The return is considered filed on the date it is postmarked, regardless of when it is actually processed. If the return is e-filed after January 15th, there is two additional months of late filing. Why would that be an issue?

But that does not understate the tax return as signed by the preparer; 1120-S. Therefore section 6694(b) does not apply. Same thing, there is no understatement on the 1120-S. There cannot be an understatement penalty if there is no understatement, I would question the CPE provider. So he is saying 20 x $5,000, I say prove it. The only penalty I can see would be under section 6701 as to the resulting understatement on the clients form 1040 for reporting a distribution vs a wage. Maybe the IRS could take the position that preparer's role in preparation of the 1120-S was an act of aiding and abetting understatement of tax liability on the individual's 1040. However, the maximum section 6701 penalty is $1,000 for an individual tax return. So I question how the presenter came up with $100,00.

From an attorney I spoke to about this YEARS ago, as long as you explain to the client their obligation within the IRS rules and explain to them the penalties and interest which could be applied, you weren't willfully negligent (document it). I couldn't tell you if that's true as I'm not with the IRS but I recall it with Circular 230 that notifying them of their obligations and penalties is a big deal in your liability. I'm lucky because all my 1120S corps show a loss and I'm doubting the IRS is going after them. I've had them in the past and when I harped on their obligations, they left for a preparer who was less worried about it. I realize people would throw a fit but 1120S tax rules need to change. They are just ripe for abuse.

The $5,000 penalty falls under sec. 6694(b) for understatement due to willful or reckless conduct on behalf of the preparer. Have you seen an actual "Reasonable Compensation" case where sec 6694(b) was imposed on the preparer? I have not. Yes, that would be the correct thing to do. There appears to be a common practice of reporting the distribution on 1099-NEC for the year in question, and then bringing client into compliance in following year. I think that would be a questionable practice.

Here is a link to register for a FINCEN online webinar about Beneficial Ownership Reporting this Wednesday: https://fincen.zoomgov.com/webinar/register/WN_lh7pK9P8T5WD7w4ZPAYCGw

The E&O carriers and AICPA are currently backing away with concerns the reporting might be seen as a legal matter, but I think that might change once the dust settles. For my existing clients I refer them to the Jan 2024 vs 2005 reporting requirements.

As Lee B said, it does not stop the late filing penalty. But it does stop interest after the payment date (on the tax).

It's pretty easy reading. I got through it in around an hour. See chart on page 2. The form they file doesn't matter so much as if the C, E or F business is a LLC.

Overwhelming demand for knowledge and compliance guidance.... Tom Longview, TX

Hmm, if closed so quickly, I do hope it is offered again and soon!

reigstration is already closed for this webinar, minutes after receiving the email

This is a few years old, so there may be some changes, but it does a good job of explaining preparer penalties. https://www.thetaxadviser.com/issues/2017/feb/preparer-penalties-sec-6694-6695.html When you prepare and sign a return you are stating that it is true and correct. If there is reasonable doubt, I wouldn't sign. If client can not provide financial statements that make sense, I will tell them: 1. Where I have issues for them to try to fix them or 2. That they need to hire a qualified bookkeeper or 3. They need to provide me with all documents to create accurate statements, or 4. Go somewhere else If they don't take any compensation and come to me after year end, I may or may not prepare one return based on that with a clear understanding that they immediately start taking compensation. If they appear to have a genuine interest in doing so, I'll likely prepare the return. If they want to argue with me, I'll decline the engagement. Same thing if they take what I believe is substantially lower than reasonable compensation. Remember that clients talk with other business owners. If they see that they can push you around to doing things the way they want rather than what you know to be an accurate return, they will tell others. Do you want your business built on a client list like that? I've walked away from quite a bit of fees over the years if the potential clients didn't live up to my expectations. I've also left jobs where I was the internal accountant and pressured by owners to provide misleading financials for bank or tax purposes. One of the main reasons I started my own firm was so that I am the one making the decisions that effect my integrity.