Regulating Tax Return Preparers

The Tax Attic with Jerry Coon

July 15, 2010 // 0 Comments

Regulating tax return preparers Congress and the Internal Revenue Service are both extremely interested in regulating all tax return preparers. In fact, they are downright serious. Apparently, there are return preparers out there who don’t follow the rules, don’t know the rules or don’t choose to follow the rules. Either way, it’s a problem for not only the IRS but also for the overwhelming majority of return preparers who do follow the rules, who do know the rules, and who choose to follow the rules. A three step process is being put into place that will give the IRS information about preparers; will require preparers to show certain levels of competency in order to prepare returns; and will require preparers to obtain continuing education credit hours each year. The whole idea, in the end, is to get a better class of preparers. As of this coming September, all tax preparers must register and obtain a Preparer Taxpayer Identification Number (PTIN). There will also be a fee to be paid, of course. This fee is expected to be in the $75-$300 range and will have to be paid every three years. This is the first step in finding out exactly who is preparing tax returns. Evidently, the IRS doesn’t have a good data base of return preparers. Many preparers, such as Enrolled Agents, CPAs, and Attorneys, already have PTINs but they will still have to go through the registration process. They will be re-assigned their current number, but the information collected in the registration process is not necessarily information the IRS has right now. The IRS wants a complete data base of return preparers and, rest assured, they will get it. The hammer the IRS has in this process is that a preparer who does not register and obtain a PTIN by January 1, 2011 will not be allowed to prepare tax returns. That’s a big hammer. Accenture, the world-wide consulting firm who quickly dumped Tiger Woods, has contracted to develop the registration system. The second step in the process of getting return preparers is to make them show they are competent. As of January 1, 2011, all preparers will have to pass tests in order to prepare returns. There are expected to be three tests. […]