How much will each of them be fined

Assignment Help Accounting Basics

Reference no: EM131974044

Problem

Sam prepares income tax returns for Firm X, a commercial return preparation firm. Sam's main client is Joe. Sam prepares Joe's 2014 federal income tax return for a total fee of $10,000. Firm X also guarantees that its filings are within 1 percent of the correct tax amount or the taxpayer's fee is refunded. Sam unfortunately makes an error on Joe's return that resulted in the entire fee being refunded. Sam spent 3 whole weeks preparing the return and his annual salary is only $50,000.

If the IRS determines that Sam and Firm X should be penalized under IRC § 6694(a), how much will each of them be fined?

Would your answer be the same if the fee had not been refunded?

Reference no: EM131974044

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