IRS Places Wedge Between You and Your Accountant

I was reading in Forbes Magazine that, starting January 1, the IRS is now enforcing a new rule that can cause your accountant to be less aggressive in serving your interests.

Previously, the old standard was that your accountant could safely give you tax advice if it had a "realistic probability" of success. In other words, as long as there was some reasonable basis for it.

Now, the new rule is that your accountant will risk fines ($1,000 +) and career-damaging disciplinary actions if they sign returns using advice that doesn't have at least a 51% chance of winning in tax court.

The exceptions are: if you do your own taxes, if the accountant sends a form to the IRS flagging that it is iffy (definitely not in your interest!), or documents that he warned you that there is a less than 51% chance the ruling will stand.

Some CPA's say that this will have a chilling effect on accountants. They will now effectively work for the IRS - instead of the taxpayer.

Other CPA's say that they will end up charging some clients thousands of dollars extra - to do research and write memos to CYA (cover their *sses).