The Alabama Tax Tribunal, in its Opinion and Final Order in Voncille Pompey v. State of Alabama Department of Revenue, Docket No. P. 23-1048-JP (November 19, 2024), upheld the Revenue Department’s assessment of “paid tax return preparer” penalties against Ms. Pompey for 2019, 2020, and 2021 in the amounts of $5,100, $10,200, and $10,250, respectively.
The Department’s
investigation began when the Department received a return with a suspiciously
large loss reported on Schedule C. On further investigation of the internet
protocol (IP) address used to file the return, the Department found
approximately 100 returns filed from the same address. Many of those returns
featured large business losses on Schedule C without any documentation to
substantiate the claimed losses.
Inquires of the
taxpayers involved in those returns led the Department to Ms. Pompey, who was identified
by several of them as someone who they paid to prepare their returns.
At the hearing
before the Tax Tribunal, Ms. Pompey denied being a paid tax return preparer,
instead claiming she “would simply answer tax questions when someone called her
and offer them [advice] concerning how and where to find the answers to their
questions.” When confronted with evidence that she was paid by some of the
taxpayers, she stated that the payments she received were only “donations”
in an amount that varied depending on the extent to which she had to help them.
Not surprisingly, the Tax Tribunal concluded the “donations” were indeed payments for tax preparation and that Ms. Pompey was subject to the requirements imposed on paid tax return preparers. Therefore, the Tribunal upheld the assessment of the penalties imposed.
To read the details of the case, click here.
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