IRS Announces New Regulation that Targets Tax Professionals

July 24, 2010 | By: TaxCure Staff

irs wants tax preparers to registerWith 80% of Americans relying on tax professionals or software to file their tax returns, it is shocking that the tax return preparer industry is one of the few that sets no universal standard on what qualifications are required. In fact, California and Oregon are the only states that have any sort of mandatory test.

This is even more unnerving when you consider the valued information that these ‘experts’ are entrusted with.

The increased number of taxpayers turning to professionals during tax season led Doug Shulman, IRS Commissioner, to conduct a study on the expanding industry. In January, after six months of research Shulman announced his proposal of new regulations that would help improve the standards set for preparers. The plans included:

  • Mandatory skill exams for all paid return preparers with the exception of CPAs and attorneys
  • Increased education all paid return preparers with the exception of CPAs and attorneys
  • Expanding the Treasury Departments ethical rules to all preparers (currently only applies to CPAs and attorneys)

In March the Internal Revenue Service drafted a more concrete list of regulations that would be applicable to any paid tax return preparers. Through this, those affected would be required to register with the IRS and acquire a PTIN, a preparer tax identification number. A PTIN was previously only used by paid preparers who did not wish to release their social security number on the returns that they completed. However, under this newly introduced regulation, a PTIN would be mandatory.

On Thursday, July 22nd the IRS released additional information pertaining to tax preparer registration. The IRS announced that a $50 fee would be implemented for those who apply for a PTIN and that this revenue is to be applied towards the additional expenses that the IRS would incur for technology costs and various outreach efforts. In addition to the $50 fee that will be payable to the IRS, those who apply will also be responsible for covering the cost of the vendor that will be selected to launch a new online system. Further details regarding the new internet system and exact costs will be released to the public in the near future.

According to the IRS, professional tax preparers and others affected by the new regulations can submit their feedback until August 23, 2010. To help provide assistance to tax professionals the IRS is conducting six tax forums this summer that will present tax preparers with relevant information on both state and federal tax concerns. The forum schedule is as follows:

  • June 22-23: Atlanta, GA
  • July 13-15: Chicago, IL
  • July 27-29: Orlando, FL
  • August 10-12: New York, NY
  • August 24-26: Las Vegas, NV
  • August 31-September 2: San Diego, CA