The American Institute of CPAs wants Congress to modify a little-noticed provision in the recently passed Iraq war-funding bill that the institute fears may put tax preparers at odds with their clients.
The U.S. Troop Readiness, Veteran's Care, Katrina Recovery and Iraq Accountability Appropriations Act of 2007, enacted in May, contains a provision that increases tax preparers' tax return reporting standards for undisclosed, non-tax-shelter items, raising them from the "realistic possibility of success" standard to the "more likely than not" standard. The change subjects preparers to a more rigorous standard than taxpayers, and could force preparers to ask clients to disclose more information than they need to in order to protect the preparer from understatement penalties.
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