Technology
IRS Proposes Registration, Testing, CPE for All Paid Tax Preparers
Jan. 27, 2010
With tax and accounting professionals heading into the beginning of the TY
2009 income tax filing season, the IRS has announced significant new changes
that it plans to implement starting in Jan. 2011, along with enhanced enforcement
measures that will start this season. The changes are geared toward providing
regulation of the thousands of unlicensed and uncredentialled tax preparers
across the country who offer filiing services.
The most notable of the proposed changes schedule to start in 2011 (for 2010
income tax reporting) includes requiring paid preparers to register with the
IRS, receive a “preparer tax identification number (PTIN), take an initial
competency test and take at least 15 hours or continuing professional education
(CPE) courses per year. Ethics rules found in Circular 230 would also be extended
to this new group of paid preparers. The changes in licensing and CPE would
not affect professionals already recognized by the IRS, such as CPAs, enrolled
agents and attorneys, so long as they are in good standing with their respective
licensing agencies.
“As tax season begins, most Americans will turn to tax return preparers
to help with one of their biggest financial transactions of the year. The decisions
announced today represent a monumental shift in the way the IRS will oversee
tax preparers,” said IRS Commissioner Doug Shulman. “Our proposals
will help ensure taxpayers receive competent, ethical service from qualified
professionals and strengthen the integrity of the nation’s tax system. In addition,
we are taking immediate action to step up oversight of tax preparers this filing
season.”
Other measures the IRS anticipates taking in 2011 are highlighted in the full
report on the IRS website (.pdf document).
Changes for 2010
In addition to the changes proposed for next year, the IRS has started sending
notices to to approximately 10,000 preparers across the country who handle “large
volumes of specific tax returns where the IRS typically sees frequent errors.”
(The full text of the letters is available
here.)
These include reminding the professionals to practice due diligence when handling
Schedule C income and expenses, Schedule A deductions and qualification for
the EITC and homebuyer credits. Agents may also visit many of these preparers
and, under a separate enforcement program, the IRS is also planning to conduct
compliance investigations of paid preparers that may include agents posing as
taxpayers. More information on IRS changes for this year can be accessed
here.
The CPA Technology Advisor will continue to monitor the proposed preparer changes.
You can also join in the conversation about the changes on our blog, www.cpatechviews.com.
More resources:
IRS Fact Sheet:
The New Return Preparer Review
FAQs
about potential agent office visits