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January 06, 2010

New Rules in Place for Paid Tax-Return Preparers - IRS Announces

Vince Nardone of Nardone Law Group, LLC discusses the IRS’ recent news release 2010-1, dealing with paid tax-return preparers. 

According to IR 2010-1, the Internal Revenue Service kicked off the 2010 tax filing season today by issuing the results of a landmark six-month study that proposes new registration, testing and continuing education of tax return preparers. See the attached study in pdf format.  According to the IRS, with more than 80 percent of American households using a tax preparer or tax software to help them prepare and file their taxes, higher standards for the tax preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term.

To bring immediate help to taxpayers this filing season, the IRS also announced a sweeping new effort to reach tax return preparers with enforcement and education. As part of the outreach effort, the IRS is providing tips to taxpayers to ensure they are working with a reputable tax return preparer.

The IRS goes on to say that based on the results of the Return Preparer Review, the IRS recommended a number of steps that it plans to implement for future filing seasons, including:

· Requiring all paid tax return preparers who must sign a federal tax return to register with the IRS and obtain a preparer tax identification number (PTIN). These preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid.

· Requiring competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.

· Requiring ongoing continuing professional education for all paid tax return preparers except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.

· Extending the ethical rules found in Treasury Department Circular 230 -- which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS -- to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct.

The registering and testing of tax return preparers has been on the radar screen of the IRS for some time.  It will be interesting to see the impact it has on the tax return preparer community, and the potential influx of cases into the IRS Office of Professional Responsibility.

Download Tax Return Preparer Study - IRS

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January 06, 2010

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