Identify Taxpayer And Practitioner Penalties Practice Test

A paid tax return preparer knowingly claims a $25,000 nonrefundable credit for a client despite clear documentation that the client is not eligible, resulting in an understatement of tax. Under IRC §6694 and the ethical standards in Circular 230, what consequence does the practitioner face for this action?

A taxpayer submits a return that omits a large amount of income with the intent to evade tax. The IRS determines the understatement was due to fraud. Which penalty applies to the taxpayer in this scenario?