In the wake of studies that found that tax returns filed by paid preparers can be riddled with mistakes, the Internal Revenue Service is clamping down on the industry. Up to now, paid tax preparers in the vast majority of states were free to hold themselves out as experts without any training whatsoever. Nor did they have to prove any minimum level of competency.
First up, beginning next month, the IRS is rolling out competency tests for hundreds of thousands of tax preparers nationwide. Next year, continuing education requirements – 15 hours worth per year – kick in. » Read more..
Document requests from examiners when audits are initiated will often seem rather intimidating. When representing substantial clients, we often attempt to actually give them everything they ask for in a neatly cross-referenced book. Knock on wood, that has resulted in quite a few no-changes in the last several years. Exams is the paper tiger of the IRS. They can drive a taxpayer who wants to be compliant insane, but they can’t really do anything to you other than ultimately send you a bill in the form of a statutory notice of deficiency. You have ninety days to appeal that determination in Tax Court. » Read more..
Tax Preparers who already have a PTIN from the IRS do not have to pass the exam until Dec. 31, 2013
The Internal Revenue Service released the specifications on Tuesday for the competency test that individuals must pass to become a Registered Tax Return Preparer.
The test is part of an ongoing effort by the IRS to enhance its oversight of the tax preparation industry. That effort began with the requirements for all tax preparers to register with the IRS and receive a Preparer Tax Identification Number, or PTIN, for this tax season. The other components of the IRS requirements include testing and continuing education.
Preparers who pass this test, along with a background check and tax compliance check, as well as complete 15 hours of continuing education annually will have a new designation: Registered Tax Return Preparer.
The specifications identify the major topics that will be covered by the test, which will be available starting » Read more..
This article written by Kelly Phillips Erb
It’s not just the kids that have to take tests these days. Attorneys, CPAs, doctors, engineers, architects and nurses must generally pass standardized competency tests in order to practice. You can now add tax professionals to the list.
Over the past year, the IRS has made increased oversight of tax professional a top priority. As a first step, the IRS began requiring tax professionals to register for a PTIN (Preparer Tax Identification Number) in 2010 for the 2011 season. » Read more..
The IRS will soon be looking over the shoulders of tax return preparers and their clients when they report stock sales on Schedule D, Form 1040.
For stock acquired and sold after 2010, the IRS will receive information returns from security brokers reporting the adjusted basis of the stock sold and whether the capital gain or loss on the sale is short-term or long-term. These information returns will allow the IRS to double check what you report for your clients on Schedule D.
The silver lining for your clients is that they will have some control over what their brokers report in certain situations. Your clients should receive information and advice from their brokers about the new rules. However, if there are slip-ups, you are going to have to explain to your clients why their tax bill is higher than they expected. » Read more..