Part III – Administrative, Procedural, and Miscellaneous Restrictions on Use of the Term Registered Tax Return Preparer Notice 2011-45 The Department of the Treasury and the IRS are implementing the recommendations contained in Publication 4832, “Return Preparer Review.” As part of this implementation, the Department of the Treasury and the IRS have issued final regulations
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
Recent IRS News View recent, tax-related IRS news releases below. Resources for Tax Preparers: IRS Releases Specifications for Registered Tax Return Preparer Test IR-2011-89, Sept. 6, 2011 WASHINGTON — The Internal Revenue Service today released the specifications for the competency test individuals must pass to become a Registered Tax Return Preparer. The test is part of an ongoing
Tax preparation software for tax preparers and PTIN hassle. WASHINGTON, D.C. (NOVEMBER 23, 2011) The Internal Revenue Service said it plans to add a new option to its Preparer Tax Identification Number system in December for users who need to change the email address associated with their online PTIN accounts. The new option
In 2012, Many Tax Benefits Increase Due to Inflation Adjustments IR-2011-104, Oct. 20, 2011 WASHINGTON — For tax year 2012, personal exemptions and standard deductions will rise and tax brackets will widen due to inflation, the Internal Revenue Service announced today. By law, the dollar amounts for a variety of tax provisions, affecting virtually every
The Internal Revenue Service is temporarily shelving its controversial plan to fingerprint tax preparers, IRS Commissioner Doug Shulman said Tuesday. Speaking at the American Institute of CPAs’ National Tax Conference, Shulman described some of the IRS’s latest moves, including ones influenced by the AICPA. The AICPA wrote to Shulman last month asking the agency
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
Preparers who no longer have access to the email addresses associated with their PTIN accounts or who do not remember what email address they used when obtaining a PTIN can now update their email addresses without logging into their accounts.
Simply select “Forgot or Cannot Access Email?” from the Tax Professional PTIN System. Preparers must know their Last Name, Date of Birth, PTIN, Social Security Number, and the answer to their Secret Question in order to use this functionality.
IR-2011-100, Oct. 12, 2011
WASHINGTON — The Internal Revenue Service today advised tax professionals and tax firms that do not have Electronic Filing Identification Numbers (EFINs) to start the process to obtain EFINs now so they can meet new e-file requirements for 2012.
Starting in January 2012, any paid preparer or firm that reasonably anticipates preparing and filing 11 or more Form 1040 series returns, Form 1041 returns, or a combination of Form 1040 series returns and Form 1041 returns generally must use IRS e-file. Their clients who file these forms, however, may independently choose to file by paper.
To become Authorized IRS e-file Providers, preparers must create an e-Services account, submit an EFIN application and pass a suitability check. The approval process can take 45 days or more. For a firm or an individual, only one EFIN is needed.
The 2012 requirement will mark the second and final phase of implementing a law that was intended to boost the electronic filing rate of income tax returns for individuals, trusts and estates. In 2011, the e-file mandate pertained to any paid preparer or firm that anticipated preparing and filing 100 or more returns. The e-file rate by paid preparers increased 12 percent in 2011.
Currently, nearly 80 percent of individual tax returns are filed electronically. The IRS has processed more than 1 billion individual tax returns safely and securely since the nationwide debut of electronic filing in 1990.
Preparers can review the process on IRS.gov at Become an Authorized e-file Provider or find additional guidance at the Frequently Asked Questions section.
If the requirement will cause undue hardship, preparers may seek a one-year waiver by submitting Form 8944, Preparer e-file Hardship Waiver Request. If a client wants to file a paper return, the preparer should include Form 8948, Preparer Explanation for Not Filing Electronically, with the return. A taxpayer choice statement should be obtained and kept with the preparer’s records.
Form 8948 does not have to be submitted with returns that are not currently accepted electronically by the IRS or the IRS has instructed taxpayers not to file them electronically. These returns are exempt from the federal e-file requirement. Other limited exemptions may apply.
A six-digit Identity Protection Personal Identification Number or IP PIN is being provided to those victims of tax-related identity theft who have had their identities verified by IRS to avoid delays in processing their federal returns.
If your client indicates he or she received IRS Letter 4869CS providing them with an IP PIN, please ask your client for the letter and follow the instructions provided when preparing the return. Important: If your client received an IP PIN, please enter it on the tax return to avoid processing delays.
For electronic returns, the software will indicate where to insert the IP PIN. For paper returns, enter the IP PIN in the six boxes to the right of the spouse’s occupation in the signature section.
Tax professionals may send general inquiries to-IPPIN.Questions@irs.gov
On Nov. 21, 2011, the 3% Withholding Repeal and Job Creation Act of 2011 was signed into law, repealing section 3402(t) of the Internal Revenue Code (IRC). This legislation eliminates the withholding and reporting requirements established under IRC section 3402(t) and the accompanying regulations.
IRC section 3402(t) would have required all Federal and state government entities, and some local government entities, to withhold 3% on certain payments to contractors, beginning on Jan. 1, 2013. The regulations under section 3402(t) also required the government entity to report the amount of the payment and the amount withheld on Form 1099-MISC.
Professional tax preparation software for tax preparers is best to use for tax preparation for professional tax preparers.
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IR-2011-114, Nov. 30, 2011
WASHINGTON –– The Internal Revenue Service will kick off a series of public meetings Thursday, Dec. 8 to gather feedback on how to implement a series of long-term changes to the tax system described by IRS Commissioner Doug Shulman in an April 2011 speech at the National Press Club. In that speech, the Commissioner described a vision where the IRS would move away from the traditional “look back” model of compliance, and instead perform substantially more “real time,” or upfront matching of tax returns when they are first filed with the IRS. The goal of this initiative is to improve the tax filing process by reducing burden for taxpayers and improving overall compliance upfront.
Under the vision of a real-time tax system, the IRS » Read more..
Video: Undeliverable Refunds: English | Spanish | ASL
Podcast: Undeliverable Refunds
IR-2011-113, Nov. 30, 2011
WASHINGTON — In an annual reminder to taxpayers, the Internal Revenue Service announced today that it is looking to return $153.3 million in undelivered tax refund checks. In all, 99,123 taxpayers are due refund checks this year that could not be delivered because of mailing address errors.
Undelivered refund checks average $1,547 this year.
Taxpayers who believe their refund check may have been returned to the IRS as undelivered should use the “ Where’s My Refund?” tool on IRS.gov. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems.
Taxpayers checking on a refund over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954. » Read more..
The Internal Revenue Service said it plans to add a new option to its Preparer Tax Identification Number system in December for users who need to change the email address associated with their online PTIN accounts.
The new option will also help people who have forgotten their user IDs or passwords, but don’t have access anymore to their original email » Read more..
Our service uses the most advanced tax preparation software, written specially for professional use. After many years in the business of tax preparation and dealing with professional tax preparers, I realize that software used for preparing tax returns for your clients must be most advanced and be able to handle all aspects of you clients needs.
As an example, lets say your client needs to file a joint federal and a married filing separate state tax returns. Not the same state, but different states. This software allows you to do just that. Tax return will be split between Taxpayer and Spouse and will produce properly split returns. I have created data sheetsthat allow you to describe which income/deductions belong to Taxpayer and which belong to Spouse.
This software was written a specially for use in a service bureau environment and allows each individual tax preparer have his or her own account number. This assigned account number will have your PTIN, EFIN, EIN and all other needed information that needs to be printed on federal and state tax returns. This information also used when returns being submitted to the IRS during e-file.
Tax return preparation software is only as good as the people who designed it and experts, who have enough experience, to make it possible to be versatile enough and intuitive to be able to create special warning system that gives you heads up on the little things that you could have missed.
The reason this software is this good is exactly that. When tax returns have been keyed into the system, an expert runs it through the special warning faze, which has been designed by our team of programmers, that shows all items that could have been missed by the tax preparer. In this case, the person responsible for reviewing your tax return, will send an email or will call you to discuss possible changes that might need to be made to the tax return.
WASHINGTON — The Internal Revenue Service is moving into the next phase of its effort to improve the tax preparation industry by launching the new Registered Tax Return Preparer competency test.
The new competency test is part of a larger initiative to increase oversight of the tax preparation industry. Last year, the IRS required all paid tax return preparers to obtain a Preparer Tax Identification Number (PTIN). Those tax return preparers who currently have a valid PTIN and are required to take the new test will have until Dec. 31, 2013, to pass it.
Preparers who pass the test and meet other requirements will be given a new designation: Registered Tax Return Preparer. In order to maintain that designation, the individuals must renew their PTINs annually and complete 15 hours of continuing education each year. Enrolled Agents, Certified Public Accountants, and attorneys, among others, are exempt from the new testing and education requirements. These professional groups already meet more stringent guidelines to obtain their professional credentials.
“This is another major step forward in our effort to enhance tax preparation service to millions of taxpayers. People should feel assured that the person they hire to prepare their federal tax returns has a working knowledge of the tax code,” said Doug Shulman, IRS Commissioner. “The majority of tax return preparers are reputable professionals but the few bad apples cause great harm to taxpayers and the industry.”
The fee for the competency test is $116, which includes the IRS portion of the fee and the fee for Prometric Inc., a third-party test vendor. The test covers preparation of the Form 1040 and its related schedules. Test scheduling begins next week. Initial test takers won’t receive their test scores for two to six weeks to allow the IRS to validate the exam and determine the pass/fail cutoff. Once validation is complete, around mid-January, those taking the computer-based test will receive their scores at the test center immediately upon completing the test.
Prometric will eventually administer the test at more than 260 centers nationally, but the test is not available at all locations currently. Test sites will be added daily and international locations may be added in the future.
Over 750,000 tax return preparers have obtained PTINs. The IRS estimates that approximately 350,000 people may be initially subject to the Registered Tax Return Preparer test requirement.
Fact Sheet 2011-12 provides additional details about the test, including which preparers are required to take it and how to schedule an appointment.
Work on background check implementation plans continue
The IRS continues to study the most appropriate ways for requiring certain tax return preparers to undergo a background check. The background check is necessary to ensure tax return preparers have not engaged in disreputable conduct and are suitable for practice before the IRS. The IRS will provide additional guidance concerning the background check in coming months.
While the IRS continues to review the issues surrounding background checks, it will issue Registered Tax Return Preparer certificates to individuals who pass the Registered Tax Return Preparer test and a tax compliance check. Individuals issued Registered Tax Return Preparer certificates may begin using the Registered Tax Return Preparer designation, but they still may be subject to additional background checks that the IRS may implement in the future.
Special Enrollment Examination remains unchanged
The process for individuals to become an Enrolled Agent remains unchanged. Most Enrolled Agents have passed a comprehensive three-part IRS test (Special Enrollment Examination) covering individual and business standards and representation rules. Enrolled Agents also must complete 72 hours of continuing education every three years. Most Enrolled Agents have unlimited practice rights before the IRS, which means they can represent clients regarding any tax matter.
The process for registering and taking the Special Enrollment Examination remains unchanged. More information on the Registered Tax Return Preparer Competency Examination and the Special Enrollment Examination is available at www.IRS.gov/taxpros/tests.
PTIN renewal season reminder
All PTIN holders must renew their PTINs for the 2012 filing season by Dec. 31, 2011. The PTIN renewal fee for 2012 is $63. Return preparers who obtained their PTINs by creating an online account should renew their PTINs at www.IRS.gov/ptin.
Preparers who used paper applications to receive their 2011 PTINs were sent an activation code that they can use to create an online account and convert to an electronic renewal for 2012. Individuals can also renew using a paper Form W-12, IRS Paid Preparer Tax Identification Number Application, but renewing electronically avoids a four to six week wait for processing the renewal request.
IRS will add a new option to the PTIN system in mid-December for users who need to change the email address associated with their online PTIN accounts. The new functionality will also help people who have forgotten their user IDs and/or passwords but don’t have access to their original email accounts. Preparers in this situation are encouraged to wait for this online option instead of sending paper applications, which take four to six weeks to process.
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