Tax services provider H&R Block said it will not offer refund anticipation loans during the 2012 tax season, but will continue to provide other low-cost financial products.

A refund anticipation loan (RAL) is a short-term loan based on a taxpayer’s anticipated federal tax refund and is a highly profitable business for tax preparers. The loans usually last 7-14 days until taxpayers receive their refunds from the U.S. Internal Revenue Service.

“Knowing we had a strong 2011 tax season without RALs, our analysis did not present a compelling reason to bring back the product in 2012,” Chief Executive Bill Cobb said in a statement.

H&R Block was unable to offer RALs in 2011 after regulators directed its third-party lending bank to stop funding the product.

The Kansas city, Missouri-based company said it will continue to offer other low-cost financial services such as refund anticipation checks (RACs).

RACs allow taxpayers to deduct the cost of tax preparation from their tax refund.

Source (Reuters)

Tax preparers are chewing their pencils as the U.S. Internal Revenue Service gets ready to impose the first comprehensive program of fees and rules on the industry’s 730,000 practitioners.

Some fear the IRS campaign against tax fraud could squeeze out small, independent businesses and allow large competitors such as H&R Block Inc and Jackson Hewitt Tax Service Inc to capture market share.

The IRS, which plans to finalize the new fees in coming months, recently said it was open to ways to mitigate costs.

To get certified, preparers will need to register » Read more..

IRS Issues Proposed Regulations That Would Require Tax Preparers to File Due Diligence Checklist with All EITC Claims Submitted in 2012

IR-2011-98, Oct. 6, 2011

WASHINGTON —The Internal Revenue Service announced today that it is issuing proposed regulations that would require paid tax return preparers, beginning in 2012, to file a due diligence checklist, Form 8867, with any federal return claiming the Earned Income Tax Credit (EITC). It is the same form that is currently required to be completed and retained in a preparer’s records.

The due diligence requirement, enacted by Congress over a decade ago, was designed to reduce errors on returns claiming the EITC, most of which are prepared by tax professionals. » Read more..

EITC Preparer Compliance – Targeted, Tailored and Tiered

According to the latest IRS release, because of the multiple system abuse by taxpayers and tax preparers not doing their due diligence when it comes to EITC the following steps will be necessary to stop system wide abuse.

This is what they will do for 2012 tax season: 

It’s

 Why Have a Preparer Compliance Program?

We estimate 24 to 29 percent of all EITC claims have some type of mistake which costs the government $13 billion to $16 billion each year. » 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..