Circular 230, Subpart B
Eddie's new client, Felicity, has a meal delivery service. Upon reviewing Felicity's prior-year returns, Eddie realizes that Felicity incorrectly deducted the cost of parking tickets for illegally parked delivery vans for the last two years. The ethical standards or Circular 230, Subpart B require Eddie to:
Notify the IRS of the error on prior-year returns.
Insist that Felicity amend her prior-year returns, and refuse to assist her with any other tax preparation unless she agrees.
Reduce her current-year business expenses by the amount of the incorrect prior-year deductions.
Explain to Felicity that the deduction is disallowed and could lead to penalties, and encourage her to amend her prior-year returns
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