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Return Preparers Under IRS Scrutiny: Exercising Due Diligence, Badges of Fraud, Recent Cases

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, February 10, 2022

Recorded event now available

or call 1-800-926-7926

This course will identify what actions could make a tax return preparer the target of an IRS investigation. Our authoritative panel will discuss situations that may result in fraud referrals and review current and notable cases against tax return preparers to provide steps tax professionals can take to reduce the chances of being investigated by the IRS.


The IRS' budget shortfalls and increased Congressional scrutiny into the agency’s affairs have led to an increased focus on enforcement and collection actions by the IRS. The IRS is touting its use of data analytics to identify trends and flesh out noncompliant taxpayers. The results of these initiatives will likely include a close look at the conduct of the tax advisers and professionals involved. This heightened focus on fraud, non-filers, and material advisers should make every tax practitioner wary.

Some tax adviser actions that are subject to IRS scrutiny are clear. Promoters of specific abusive tax shelters are being pursued and held accountable. However, what often seem like simple collection and civil matters can quickly escalate to referrals for criminal investigations. Practitioners need to familiarize themselves with the badges of fraud included in the Internal Revenue Manual, as these should be the basis for due diligence and considered for any client subject to an IRS examination. The list of tax adviser sanctions includes return preparer and promoter penalties and injunctions, OPR sanctions for violations of Circular 230, and even criminal charges. Tax practitioners need to understand how to stay off the IRS' radar.

Listen as our panel of IRS tax controversy experts discusses specific actions that could warrant a tax preparer investigation, indications an examination may become a criminal matter, and exercising due diligence during clients' IRS examinations.



  1. The Internal Revenue Service's current focus on tax preparers
  2. Civil examinations and penalties
  3. Criminal examinations and penalties
  4. Material advisers and promoters
  5. Actions by tax professionals that draw the IRS' attention
  6. Exercising due diligence
  7. Recent and notable cases


The panel will review these and other key issues:

  • What are the fraud indicators outlined in the Internal Revenue Manual?
  • What are specific tax practitioner activities known to draw IRS scrutiny?
  • What signs indicate a client's examination may become a criminal matter?
  • When does the IRS' focus shift from the taxpayer to the preparer?
  • What tax preparer sanctions are available to the IRS?


Elber, Niles
Niles A. Elber

Caplin & Drysdale

Mr. Elber, a Member in Caplin & Drysdale's Washington, D.C., office, has more than 20 years of experience...  |  Read More

Wiley, Melissa
Melissa L. Wiley

Caplin & Drysdale

Ms. Wiley’s practice focuses on assisting clients to come into compliance with their U.S. tax obligations and...  |  Read More

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