Promoter penalties and injunctions

1Summary

When a research credit claim is overstated, the first consequence falls on the business that filed it. Federal law also provides tools aimed at the people who prepare or promote claims. They fall into three groups. Civil penalties apply to tax return preparers who take unreasonable positions, to promoters who make false statements about tax benefits, and to anyone who aids an understatement knowing it will result.123 Injunctions let a federal district court order a preparer or promoter to stop specified conduct, or in serious cases to stop preparing returns altogether.456 Professional sanctions under Treasury's Circular 230 let the IRS censure, suspend or disbar a practitioner, or impose a monetary penalty.7

These tools share two features. Each requires the government to prove a defined level of fault, and each acts after the claim has been filed. None of them addresses the way an adviser is paid, except Circular 230's limits on contingent fees, which a federal court has held do not reach ordinary refund claims.89

The public record on how the tools are used against research credit claims is thin. The IRS Data Book groups preparer, promoter and aiding and abetting penalties with other unrelated penalties, and no official source found for this paper reports them by type of credit.10 This paper sets out what each tool requires and says plainly where data does not exist.

2The setting

2.1Why the question arises

The research credit under Section 41 rewards qualified research expenses, and the amount of a claim depends on judgments about which activities and costs qualify. The IRS has long described these judgments as difficult to administer. In written testimony to the Senate Committee on Finance on 13 June 2006, the Commissioner of Internal Revenue said that taxpayers were filing refund claims, "often marketed to them on a contingency fee basis", to claim additional research credit, and that these claims were "frequently based on unsupportable amounts, nonqualified expenditures, or estimates for which the taxpayers do not have contemporaneous documentation".11 He reported that one IRS service center had received 673 corporate tax year claims for more than $1.3 billion in additional research credits since July 2002.11

In the same testimony the Commissioner said that the accuracy related penalties applied only where there was an underpayment of tax and provided "no disincentive" to taxpayers filing frivolous or negligent refund claims, and he suggested that the Committee could consider how the penalty could be expanded to cover abusive refund claims.11 In May 2007 Congress enacted Section 6676, a penalty on excessive claims for refund or credit, in the same public law that extended the preparer penalty from income tax return preparers to all tax return preparers.121

2.2Who is a preparer

Most of the tools turn on whether a person is a "tax return preparer". The Internal Revenue Code defines the term as any person who prepares for compensation, or employs one or more persons to prepare for compensation, any return of tax or claim for refund under the Code, including a substantial portion of one.13 Persons who only provide typing or other mechanical help, employees preparing their employer's return, and fiduciaries are excluded.13 An adviser paid to compute a research credit for a client's return or refund claim will usually fall within the definition, because the credit computation is commonly a substantial portion of the return or claim.13

3Civil penalties on preparers and promoters

3.1Section 6694: the preparer penalty

Section 6694(a) applies where a tax return preparer prepares a return or claim for refund on which any part of an understatement of liability is due to an unreasonable position, and the preparer knew or reasonably should have known of the position.1 A position is unreasonable unless there is or was substantial authority for it, or, where the position was adequately disclosed, unless it has a reasonable basis.1 The penalty is the greater of $1,000 or 50 percent of the income derived, or to be derived, by the preparer with respect to the return or claim.1 It does not apply if there was reasonable cause for the understatement and the preparer acted in good faith.1

Section 6694(b) applies where the understatement is due to a willful attempt to understate the liability for tax, or a reckless or intentional disregard of rules or regulations. The penalty is the greater of $5,000 or 75 percent of the income derived.1 The 75 percent rate was set in 2015; before then it was 50 percent.1

An "understatement of liability" includes any overstatement of the net amount creditable or refundable with respect to any tax imposed by the Code.1 An overstated research credit can therefore produce an understatement for this purpose. If there is a final determination that there was no understatement, the penalty is abated.1

Because the penalty is measured partly by the income the preparer derives from the return or claim, a larger fee for the same return means a larger maximum penalty.1 The penalty does not depend on how the fee is calculated.

3.2Section 6695: procedural failures

Section 6695 imposes smaller penalties on preparers for procedural failures: failing to give the taxpayer a copy of the return, to sign it, to include the preparer's identifying number, or to keep a copy or list.14 Each such penalty is set at $50 for each failure, subject to inflation adjustment and to reasonable cause exceptions.14 The due diligence penalty in Section 6695(g) applies to specified individual credits and head of household status, not to the research credit.14

3.3Section 6700: promoting abusive arrangements

Section 6700 applies to a person who organizes, or assists in organizing, a partnership or other entity, any investment plan or arrangement, or "any other plan or arrangement", or who participates in selling an interest in one.2 The person must make or furnish, in connection with that organization or sale, a statement about the allowability of any deduction or credit, or any other tax benefit, which the person knows or has reason to know is false or fraudulent as to any material matter, or a gross valuation overstatement as to any material matter.2

The penalty for each activity is $1,000 or, if the person shows it is less, 100 percent of the gross income derived from the activity. Where the penalty involves a false or fraudulent statement, it is 50 percent of the gross income derived.2 A gross valuation overstatement is a statement of value more than 200 percent of the correct value, where the value directly relates to a deduction or credit; the IRS may waive the penalty for it where there was a reasonable basis for the valuation and it was made in good faith.2 The Section 6700 penalty is in addition to any other penalty.2

Whether the marketing of a research credit service is a "plan or arrangement" within Section 6700 depends on the facts of the case. This paper does not assess any particular arrangement.

3.4Section 6701: aiding and abetting

Section 6701 applies to any person who aids or assists in, procures, or advises on the preparation or presentation of any portion of a return, affidavit, claim or other document, who knows or has reason to believe that it will be used in connection with a material matter under the internal revenue laws, and who knows that it would result in an understatement of another person's tax liability.3 The penalty is $1,000 per document, or $10,000 where the document relates to a corporation's tax liability, and only one penalty applies per person per taxpayer per taxable period.3 It applies whether or not the taxpayer knew of or consented to the understatement.3 Where a Section 6701 penalty is assessed for a document, the Section 6694 and 6700 penalties are not assessed on the same person for the same document.3

The knowledge requirement is demanding: the person must know that the portion would result in an understatement.3

3.5Section 6676: the claimant's own penalty

Section 6676 is a penalty on the person making a claim, not on the preparer. Where a claim for refund or credit with respect to income tax is made for an excessive amount, the claimant is liable for 20 percent of the excessive amount, unless the excess is due to reasonable cause.15 The excessive amount is the amount by which the claim exceeds the amount allowable.15 The section does not apply to any portion of the excess that is subject to an accuracy related or fraud penalty under the main penalty provisions of the Code.15 The reasonable cause wording dates from 2015; before then, the exception applied where the claim had a reasonable basis.15

Section 6662, the accuracy related penalty, adds 20 percent of the portion of an underpayment attributable to negligence, a substantial understatement of income tax and other listed grounds.16 Both penalties fall on the business, not on the person who prepared the claim.1516

Provision	Who is liable	Conduct	Amount
Section 6694(a)1	Tax return preparer	Understatement due to an unreasonable position the preparer knew or reasonably should have known of	Greater of $1,000 or 50 percent of income derived
Section 6694(b)1	Tax return preparer	Willful attempt to understate, or reckless or intentional disregard of rules	Greater of $5,000 or 75 percent of income derived
Section 669514	Tax return preparer	Procedural failures such as not signing or not giving the client a copy	$50 per failure, adjusted for inflation
Section 67002	Organizer or seller of a plan or arrangement	False or fraudulent statement about a tax benefit, or gross valuation overstatement	$1,000 or 100 percent of gross income if less; 50 percent of gross income for false statements
Section 67013	Anyone who aids, assists, procures or advises	Knowing that a document would understate another's tax	$1,000 per document; $10,000 for a corporation
Section 667615	The claimant	Excessive claim for refund or credit of income tax without reasonable cause	20 percent of the excessive amount
Section 666216	The taxpayer	Underpayment due to negligence, substantial understatement and other grounds	20 percent of the relevant underpayment

4Injunctions

4.1Section 7407: preparers

Section 7407 allows the United States, at the request of the Secretary, to bring a civil action to enjoin a tax return preparer.4 The court may enjoin the preparer from further engaging in the conduct if it finds that the preparer has engaged in conduct subject to penalty under Section 6694 or 6695 or a criminal penalty, misrepresented eligibility to practice or experience, guaranteed the payment of a refund or the allowance of a credit, or engaged in other fraudulent or deceptive conduct that substantially interferes with the administration of the tax laws, and that injunctive relief is appropriate to prevent recurrence.4 If the preparer has continually or repeatedly engaged in such conduct and a narrower injunction would not suffice, the court may enjoin the person from acting as a tax return preparer at all.4

One ground concerns guarantees: a preparer who has "guaranteed the payment of any tax refund or the allowance of any tax credit" may be enjoined.4 The statute does not define the term further.

4.2Section 7408: promoters and specified conduct

Section 7408 allows a civil action to enjoin any person from further engaging in "specified conduct".5 Specified conduct means any action, or failure to act, that is subject to penalty under Sections 6700, 6701, 6707 or 6708, or that violates any requirement under regulations issued under 31 U.S.C. 330, the statute under which Circular 230 is issued.5 If the court finds that the person has engaged in specified conduct and that an injunction is appropriate to prevent recurrence, it may enjoin the person from that conduct "or in any other activity subject to penalty under this title".5

On the face of the statute, a violation of a Circular 230 requirement is itself specified conduct.5 That would include the contingent fee rule in Section 10.27 where it applies.85 The scope of Section 10.27 for refund claims is discussed below.

4.3Section 7402: the general power

Section 7402(a) gives the federal district courts jurisdiction, at the instance of the United States, to issue writs and orders of injunction and other orders "as may be necessary or appropriate for the enforcement of the internal revenue laws", in addition to any other remedies.6 The IRS Internal Revenue Manual lists Section 7402 alongside Sections 7407 and 7408 as the actions available against preparers and promoters.17

5Professional sanctions

5.1Circular 230

Circular 230 governs practice before the IRS by practitioners: attorneys, certified public accountants, enrolled agents, enrolled actuaries, enrolled retirement plan agents and registered tax return preparers.18 After notice and an opportunity for a proceeding, the Secretary may censure, suspend or disbar a practitioner who is shown to be incompetent or disreputable, who fails to comply with the regulations, or who with intent to defraud willfully and knowingly misleads or threatens a client.7 Censure is a public reprimand.7 A monetary penalty may be imposed, not exceeding the gross income derived from the conduct, and may also be imposed on the practitioner's employer or firm if it knew, or reasonably should have known, of the conduct.7

A practitioner may be sanctioned for a willful violation of the regulations, or a reckless or grossly incompetent violation of the return standards in Section 10.34 and certain other sections.19 Section 10.34 provides that a practitioner may not willfully, recklessly or through gross incompetence sign a return or claim for refund, or advise a position on one, that the practitioner knows or reasonably should know lacks a reasonable basis or is an unreasonable position under Section 6694(a)(2).20

5.2The contingent fee rule and its limit

Section 10.27 provides that, except in listed cases, a practitioner may not charge a contingent fee for services in connection with any matter before the IRS, which includes preparing or filing returns or claims for refund or credit.8 A contingent fee includes a fee based on a percentage of the refund reported on a return or of the taxes saved.8 The exceptions cover services in connection with an IRS examination or challenge, certain claims filed within 120 days of a notice of examination, interest and penalty claims, and judicial proceedings.8

In 2014 the federal District Court for the District of Columbia held that the IRS lacks statutory authority to regulate the preparation and filing of "Ordinary Refund Claims", meaning refund claims filed after the original return but before an audit, and granted a permanent injunction.9 In reaching that view, the court noted that Congress had enacted "a comprehensive scheme of penalties to curb the potential for abuse in the preparation and filing of both original returns and refund claims", listing among others Sections 6662, 6676, 6694 and 6701.9 The result is that Section 10.27 does not restrict contingent fees for preparing research credit refund claims filed before an audit, and the penalties described above are what remains.9

6How the tools have been used

6.1What the IRS publishes

The IRS Data Book for fiscal year 2025 reports civil penalties by type of tax and type of penalty.10 Preparer penalties and aiding and abetting penalties are not reported separately. They fall within "nonreturn penalties", a category that the Data Book describes as covering a wide range of noncompliant behaviors, including noncompliance related to tax return preparers and to information returns, aiding and abetting, frivolous filings and misuse of dyed fuel, and which also includes trust fund recovery penalties.10 For fiscal year 2025 the category shows 255,990 penalties assessed, with an amount of $5,043,994 thousand.10 Those figures cannot be used to measure penalties on preparers or promoters, still less penalties connected with research credit claims.

6.2Internal procedures

The Internal Revenue Manual describes preparer and promoter penalties as "important tools for IRS enforcement".17 It directs examiners in the large business, small business and tax exempt divisions to determine whether preparer penalties are warranted on the facts of each examination, and sets out how the decision is documented.17 It describes what the IRS does, not how often it does it.

6.3Research credit cases

No official source found for this paper reports how many Section 6694, 6700 or 6701 penalties have been assessed in connection with research credit claims, or how many injunctions under Sections 7407 or 7408 have concerned research credit claims. The IRS's 2006 testimony describes concern about research credit refund claims and the absence, at that time, of a penalty on excessive refund claims, but it does not report penalty actions against preparers.11

In Swanson Reed's view, the absence of data is itself significant. Without it, no one can say whether the existing tools are used often or rarely against research credit claims, or with what result.

7What the tools do not do

7.1They act after the event

Every tool described in this paper applies after a claim has been prepared and filed, and most of them after it has been examined. A preparer penalty under Section 6694 depends on an understatement, which in practice is identified on examination.117 An injunction requires a court to find that the conduct has occurred.45 A Circular 230 sanction requires notice and a proceeding.7

7.2They require proof of fault

The standards rise from "knew or reasonably should have known" of an unreasonable position, to willful or reckless conduct, to knowledge that a document would understate tax.13 The reasonable cause exceptions apply to both the preparer and the claimant.115 These standards exist to protect advisers and taxpayers who act in good faith on difficult questions, and research credit claims raise many such questions.11

7.3They leave the claim's cost with the business

Sections 6676 and 6662 penalize the business.1516 Section 6694 penalizes the preparer, but nothing in it shifts the business's own tax, interest or penalty to the preparer.1 The business pays the disallowed credit and its own penalties whether or not the preparer is penalized.

7.4They do not address the fee

None of the Internal Revenue Code penalties described here turns on how the preparer was paid.123 The preparer penalty is scaled to the income derived, so a larger fee raises its ceiling, but a percentage fee and a fixed fee of the same amount are treated alike.1 Circular 230 does address the fee, but only for practitioners and, after the 2014 decision, not for ordinary refund claims.89

8The case for relying on penalties

Those who prefer to rely on penalties rather than fee rules make several arguments, and they deserve a fair statement.

Penalties target conduct, not business models. A penalty applies to the adviser who takes an unreasonable position, whatever the fee. A fee rule applies to every adviser who uses that fee, including those whose claims are sound.

The law already has many tools. The court in the 2014 decision described the penalty provisions as a comprehensive scheme aimed at abuse in returns and refund claims.9 On this view, the answer to overstated claims is enforcement of existing law.

Contingent fees give access to expertise. A business that cannot pay in advance can engage a specialist, and the adviser carries the cost of an unsuccessful assessment.

Fault standards protect good faith work. Research credit questions are difficult.11 A rule that penalized outcomes without fault would discourage legitimate claims.

9Our answer (Swanson Reed's position)

This section is Swanson Reed's view.

These arguments are reasonable, and nothing in this paper suggests that advisers who charge contingent fees act improperly. The issue is what each kind of rule can reach.

Penalties respond to proven fault after a claim has been filed. A fee structure operates on every claim before it is filed. A percentage fee rewards a larger claim, and that incentive is present whether or not any particular claim is overstated. Penalties cannot remove an incentive; they can only punish some of its consequences, where fault is proved.

The existing tools are also hard to measure. The government does not publish data that would show how often they are used against research credit claims.10 A policy that relies on enforcement alone relies on activity that cannot be observed from outside.

Finally, the tools that do reach the preparer leave the business's own liability where it was. A business that relied on a claim prepared for it still repays the credit and bears its own penalties.1516 A rule that removes the incentive at the start protects the business in a way that a penalty on the preparer after the event does not.

Our position

Congress should prohibit contingent fees, commonly called success fees, in federal research and development tax credit engagements under Section 41, so that advisers are paid for the work they perform rather than for the size of the claim they produce. Penalties and injunctions deal with conduct after the event; a prohibition would remove the incentive at the start. Swanson Reed, which publishes this paper, is a fixed-fee R&D tax adviser. It has a direct commercial interest in the outcome: it does not charge success fees, and a ban would remove a pricing model it competes against.

10Conclusion

The United States has a broad set of civil penalties, injunctions and professional sanctions that can reach people who prepare or promote improper research credit claims. Each requires proof of fault, each acts after the claim, and none addresses how the adviser is paid except a contingent fee rule that no longer reaches ordinary refund claims. The government does not publish data showing how often these tools are used for research credit claims. Those facts frame the choice between relying on enforcement after the event and changing the incentive before it.

References

Office of the Law Revision Counsel, 26 U.S.C. 6694, Understatement of taxpayer's liability by tax return preparer, subsections (a), (b), (d) and (e) and amendment notes for 2007, 2008 and 2015, United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapB-partI-sec6694.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 6700, Promoting abusive tax shelters, etc., subsections (a) to (c), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapB-partI-sec6700.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 6701, Penalties for aiding and abetting understatement of tax liability, subsections (a), (b), (d) and (f), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapB-partI-sec6701.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 7407, Action to enjoin tax return preparers, subsections (a) and (b), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap76-subchapA-sec7407.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 7408, Actions to enjoin specified conduct related to tax shelters and reportable transactions, subsections (a) to (c), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap76-subchapA-sec7408.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 7402, Jurisdiction of district courts, subsection (a), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap76-subchapA-sec7402.htm (accessed 11 October 2026). Back
Treasury Department, Regulations Governing Practice before the Internal Revenue Service (Circular 230), 31 CFR 10.50, Sanctions, paragraphs (a) and (c). https://www.ecfr.gov/current/title-31/subtitle-A/part-10/section-10.50 (accessed 11 October 2026). Back
Treasury Department, Regulations Governing Practice before the Internal Revenue Service (Circular 230), 31 CFR 10.27, Fees, paragraphs (b) and (c). https://www.ecfr.gov/current/title-31/subtitle-A/part-10/section-10.27 (accessed 11 October 2026). Back
US District Court for the District of Columbia, Ridgely v. Lew, Civil Action No. 1:12-cv-00565 (CRC), Memorandum Opinion, 16 July 2014, pages 1 to 2, 11 and 14 to 15. https://www.govinfo.gov/content/pkg/USCOURTS-dcd-1_12-cv-00565/pdf/USCOURTS-dcd-1_12-cv-00565-1.pdf (accessed 11 October 2026). Back
Internal Revenue Service, Internal Revenue Service Data Book, 2025 (Publication 55-B), Table 4-2, Civil Penalties Assessed and Abated, by Type of Tax and Type of Penalty, Fiscal Year 2025, and footnote 13. https://www.irs.gov/pub/irs-pdf/p55b.pdf (accessed 11 October 2026). Back
Internal Revenue Service, IRS Commissioner Testifies before Senate Committee on Finance on Compliance Concerns Relative to Large and Mid-Size Businesses, IR-2006-94 (13 June 2006), written testimony, sections "Research & Experimentation (R&E) Credit Claims" and "Penalties are Needed for Improper Refund Claims". https://www.irs.gov/pub/irs-news/ir-06-094.pdf (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 6676, Erroneous claim for refund or credit, source credit (Pub. L. 110-28, section 8247(a), 25 May 2007), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapB-partI-sec6676.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 7701, Definitions, subsection (a)(36), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap79-sec7701.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 6695, Other assessable penalties with respect to the preparation of tax returns for other persons, subsections (a) to (d), (g) and (h), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapB-partI-sec6695.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 6676, Erroneous claim for refund or credit, subsections (a), (b) and (d) and amendment note for 2015, United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapB-partI-sec6676.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 6662, Imposition of accuracy-related penalty on underpayments, subsections (a) and (b), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapA-partII-sec6662.htm (accessed 11 October 2026). Back
Internal Revenue Service, Internal Revenue Manual 20.1.6, Preparer and Promoter Penalties (Manual Transmittal 10 August 2026), sections 20.1.6.1.1, 20.1.6.1.2, 20.1.6.3.1, 20.1.6.3.2 and 20.1.6.4. https://www.irs.gov/irm/part20/irm_20-001-006 (accessed 11 October 2026). Back
Treasury Department, Regulations Governing Practice before the Internal Revenue Service (Circular 230), 31 CFR 10.2(a)(5) and 10.3. https://www.ecfr.gov/current/title-31/subtitle-A/part-10/subpart-A/section-10.3 (accessed 11 October 2026). Back
Treasury Department, Regulations Governing Practice before the Internal Revenue Service (Circular 230), 31 CFR 10.52, Violations subject to sanction. https://www.ecfr.gov/current/title-31/subtitle-A/part-10/section-10.52 (accessed 11 October 2026). Back
Treasury Department, Regulations Governing Practice before the Internal Revenue Service (Circular 230), 31 CFR 10.34, paragraph (a). https://www.ecfr.gov/current/title-31/subtitle-A/part-10/section-10.34 (accessed 11 October 2026). Back

Cite this paper

Summary

1Summary

2The setting

2.1Why the question arises

2.2Who is a preparer

3Civil penalties on preparers and promoters

3.1Section 6694: the preparer penalty

3.2Section 6695: procedural failures

3.3Section 6700: promoting abusive arrangements

3.4Section 6701: aiding and abetting

3.5Section 6676: the claimant's own penalty

4Injunctions

4.1Section 7407: preparers

4.2Section 7408: promoters and specified conduct

4.3Section 7402: the general power

5Professional sanctions

5.1Circular 230

5.2The contingent fee rule and its limit

6How the tools have been used

6.1What the IRS publishes

6.2Internal procedures

6.3Research credit cases

7What the tools do not do

7.1They act after the event

7.2They require proof of fault

7.3They leave the claim's cost with the business

7.4They do not address the fee

8The case for relying on penalties

9Our answer (Swanson Reed's position)

10Conclusion

References

About this paper

Cite this paper

Summary

1Summary

2The setting

2.1Why the question arises

2.2Who is a preparer

3Civil penalties on preparers and promoters

3.1Section 6694: the preparer penalty

3.2Section 6695: procedural failures

3.3Section 6700: promoting abusive arrangements

3.4Section 6701: aiding and abetting

3.5Section 6676: the claimant's own penalty

4Injunctions

4.1Section 7407: preparers

4.2Section 7408: promoters and specified conduct

4.3Section 7402: the general power

5Professional sanctions

5.1Circular 230

5.2The contingent fee rule and its limit

6How the tools have been used

6.1What the IRS publishes

6.2Internal procedures

6.3Research credit cases

7What the tools do not do

7.1They act after the event

7.2They require proof of fault

7.3They leave the claim's cost with the business

7.4They do not address the fee

8The case for relying on penalties

9Our answer (Swanson Reed's position)

10Conclusion

References

About this paper

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