REMEMBER THE OTHER PREPARER PENALTIES

CPAs are wise to recall that the oft-discussed penalty imposed on tax preparers for taking return positions lacking in a "realistic possibility" of success is but one of several penalties imposed to curtail preparer behavior considered inappropriate by Congress. Another preparer penalty is the subject of a recent Florida district court decision.

Mr. Ollinger, a Florida attorney, had prepared tax returns in 1991 and 1992 for a client. Ollinger arranged to have the client's tax refund deposited into the Florida Bar Client Trust Account, from which Ollinger arranged disbursements to himself for his tax preparation fee and to the client for the remainder of the refund.

The IRS imposed two $500 penalties under IRC section 6695(f), which forbids a tax return preparer from endorsing or otherwise negotiating a check for a tax refund made out to a taxpayer. The district court refused to intervene in the imposition of the penalty.

As a footnote, Mr. Ollinger also got into trouble with the Florida Bar Client Trust Fund for having illegally deposited the funds. Though not a subject of the court case, Ollinger could also receive discipline from the Treasury Department's Director of Practice under the provisions of Circular 230.

Source: Ollinger v. U.S., No. 96-342-CIV-ORL-22 (M.D. Fla. Sept. 4, 1996) *