Schauble@MIT-MULTICS.ARPA (Paul Schauble) (06/16/86)
As I read the ruling, taking the software product as the legal preparer
is exactly what the IRS is doing. This would hold the product author
responsible for the accuracy of the return, given the accuracy of the
source data, just like a human preparer. The problem I see here is that
the human preparer, if smart, will keep copies of the original data.
These won't be there for a program used at home. Obviously, this issue
is far from settled.
Paul
Schauble at MIT-Multics.arpadrears@ARDEC.ARPA ("1LT Dennis G. Rears", FSAC) (06/16/86)
Paul Schauble writes: >IRS I: The Internal Revenue Service has thrown a chill over the PC >software business. It recently ruled that creators of computer programs >that help taxpayers prepare their tax returns may be subject to >penalties if the program gives bad advice. The ruling will put the >software developers on the same footing as flesh-and-blood tax advisors: >at risk. I would assume that the author of any program that a person can reasonable rely on professional advice (law, tax, investment, etc) could be liable for any damages that results from the reliance on that advice. I would also think that most disclaimers would be held as worthless. The question in this ruling is "Does a third party have any recourse for possible damages?". As far as the ruling goes (I have not read it or seen it) I wonder if the IRS makes a distinction between a program that actually gives tax advice as opposed to guiding a person into filling out a tax form. I would be interested in the first case that reaches the tax courts to see if the IRS would win. Unlike a tax preparer the program author has no say on the final output of the return. Also this would shift the the responsibilty of the tax return from the tax payer to a program. What if some programmer wrote a public domain tax program that purposely gave bad tax advice, redid the tax tables, and did assorted meyhem to the tax codes. The programmer would then distribute it over the multitude of bbn's and other forums. Would the IRS relieve the taxpayer of responsibility? Of course not. The IRS does not even relieve the taxpayer of responibilty if even one of their agents give bad advice. > >IRS II: TCS Software of Houston is already in trouble with the IRS. The >company was contacted by the IRS because its tax-preparation software >program, Client Tax Series-1040, was listed as the tax preparer on the >1985 tax return of one Richard P. Jamerson. > >The IRS was up in arms because Mr. Jamerson had used a fictitous Social >Security number, hadn't included a check with the tax return, hadn't >signed the return or included a W-2 form. > >Fortunately for TCS, Mr. Jamerson owes no taxes since he doesn't exist. >He is the totally fictitious example that goes out with the TCS package >to show users how the software package works. Apparantly, one of the >sample returns was inadvertently mailed to the IRS. > Whoever sent that in to the IRS would be guilty of filing a frivilous tax return. I would doubt that the IRS could hold TCS liable anymore than the IRS could be liable if I sent in their sample tax return included in their tax guides. Dennis Standard & Non-Standard disclaimers apply.
abc@BRL.ARPA (Brint Cooper) (06/16/86)
1LT Dennis G. Rears (FSAC) <drears@ardec.arpa> writes:
" I would assume that the author of any program that a person can
reasonable rely on professional advice (law, tax, investment, etc)
could be liable for any damages that results from the reliance on
that advice. I would also think that most disclaimers would be held
as worthless. The question in this ruling is "Does a third party
have any recourse for possible damages?". As far as the ruling
goes (I have not read it or seen it) I wonder if the IRS makes a
distinction between a program that actually gives tax advice as opposed
to guiding a person into filling out a tax form. "
I wonder why a computer program is any different from a published book
in this regard. (I certainly hope that the lawyers don't distort the
logic of this question.) If a book gives bad advice, is the author
liable for damages? Can the IRS come after a book that gives bad or
illegal advice? Probably not.
Why the program and not the book? Why is not the taxpayer liable for
his own return?
Brintdavid@RICE.EDU (David Callahan) (06/20/86)
In article <8606180330.AA03527@ucbvax.Berkeley.EDU> abc@BRL.ARPA (Brint Cooper) writes: > >I wonder why a computer program is any different from a published book >in this regard. (I certainly hope that the lawyers don't distort the >logic of this question.) If a book gives bad advice, is the author >liable for damages? Can the IRS come after a book that gives bad or >illegal advice? Probably not. > >Why the program and not the book? Why is not the taxpayer liable for >his own return? > To cast a different light on this question, if an engineer designs a plane based on a formula in a book and the plane crashes because the formula is incorrect, who is at fault? What if the formula is embedded inside a program, is it now the engineer, who after all is an expert in the field, or the programmer (who is not)? Perhaps people who by software should demand guarantees rather then accepting liability restricting license agreements. david
abc@BRL.ARPA.UUCP (06/20/86)
David Callahan asks, "...if an engineer designs a plane based on (an incorrect) formula in a book, who is at fault?" I believe that the engineer is deemed at fault being, as David says, an "expert" in the field and, therefore, presumable able to verify the correctness or limitations of handbook formulas. Perhaps people who receive large fees for doing little more than buying and installing a commercial computer program should be held responsible in the same manner. Perhaps this would cause them to be careful to verify tools before using them. Brint
mats@fortune.UUCP (Mats Wichmann) (06/23/86)
In article <8606180330.AA03527@ucbvax.Berkeley.EDU> abc@BRL.ARPA (Brint Cooper) writes: > >I wonder why a computer program is any different from a published book >in this regard. (I certainly hope that the lawyers don't distort the >logic of this question.) If a book gives bad advice, is the author >liable for damages? Can the IRS come after a book that gives bad or >illegal advice? Probably not. > >Why the program and not the book? Why is not the taxpayer liable for >his own return? > >Brint > The IRS is jumping the gun a bit here (but when don't they). A paid tax preparer is required to SIGN the return; part of what you pay for is the tax preparer's signature and his attendant acceptance of responsibility for that portion of the return under his control (i.e., excluding bad data he may have been given). In this regard, the software program is to be regarded just like a book - it provides advice, but the taxpayer himself accepts all the responisibility for the accuracy of the return. HOWEVER...the IRS does not always play by the rules, or perhaps more accurately, they try to make their own. I don't suppose anyone wants to open this can of worms again, but they are the only entity in the country apparently not subject to due process. So don't count on them leaving software copanies alone. They do on occasion hassle publishers and authors of books that bring up points they would rather not have mentioned. Also, I should note that there are other areas where the computer can generate a valid legal document, such as will-writing, although human signatures are still what make it valid. The difference is that the authors of the will-writing programs guarantee to produce a valid document, whereas I am sure the tax-perparation people do nothing of the sort. Mats Wichmann Fortune Systems