Preparer Reg.

[taxmandan]

The only thing I can think of is to have the IRS maintain a list of people who can sign each type of return. Then computers would sort through and find the ones signed by someone who didn't have the right to do so. Of course they would have to allow for correction of their list as part of the process but at the end of the day there would seem to be three things they could do and in my opinion all would be appropriate.

1. They could give the return more scrutiny than it would have gotten other things being equal and they can make a point of letting the taxpayer know in advance that is happening or will happen.

2. They could penalize the client for using an inappropriate preparer and even could make sure that the professional was prevented from reimbursing this directly or through an E & O policy.

3. They could penalize the preparer say twenty times the fee for the return and audit the records of the preparer to look for other inappropriate returns.

The problem with all this is the necessary resources to do it all and still leave some enforcement on other issues.

I wonder if they'll ever find the busiest tax preparer in the country: "Self-prepared." He does alot of returns around here, and doesn't bother with our state preparers license.

[DonPriebe]

If I hear of ANYONE who still only charges a hundred dollars to do a simple tax return after mandatory licensing takes affect, I’m going to scream.

Get your throat spray ready. We have hundreds of people locally who do simple tax returns for FREE after taking a mandatory IRS test. I graded some of those tests today after they completed their mandatory annual retraining.

Whatever the IRS comes up with, it's got to be more meaningful than the new New York tax preparer registration system. The ONLY requirement for NY registration is the payment of the fee.

[erchess]

Policing

The only thing I can think of is to have the IRS maintain a list of people who can sign each type of return. Then computers would sort through and find the ones signed by someone who didn't have the right to do so. Of course they would have to allow for correction of their list as part of the process but at the end of the day there would seem to be three things they could do and in my opinion all would be appropriate.

1. They could give the return more scrutiny than it would have gotten other things being equal and they can make a point of letting the taxpayer know in advance that is happening or will happen.

2. They could penalize the client for using an inappropriate preparer and even could make sure that the professional was prevented from reimbursing this directly or through an E & O policy.

3. They could penalize the preparer say twenty times the fee for the return and audit the records of the preparer to look for other inappropriate returns.

The problem with all this is the necessary resources to do it all and still leave some enforcement on other issues.

[gkaiseril]

Since the IRS will be conducting EITC reviews on preparers this year, you may start to see some preparers facing stiff fines and punishment. If the IRS thinks a preparer is preparing fraudulent returns, they can now pull a of his/her suspect returns electronically and review them.

[erchess]

Raising Fees

makes sense if and only if the number of people who legally or otherwise prepare the relevant returns is decreased substantially without a corresponding increase in the cost of DIY programs. I don't see how licensing will achieve that because it will surprise me if there is even a two percent failure rate on the lower level exam and it would shock me if there were a robust effort to shut down illegal preparers. Also I think I read that you can work legally for up to three years failing the exam each year. Besides that it seems obvious that only the signing preparer will have to be licensed. Many operations have each return handled by many different folks and then signed by an Attorney, EA, or CPA.

The point is that all the options a taxpayer has for completing the return must compete with each other and there are really only four battlegrounds: price, the bottom line on the return, the probability of trouble later, and customer service. I have listed them in order of decreasing importance to middle class taxpayers.

[WhiteOleander]

What I'm wondering about is the testing. One test will test for wages and other personal income. The other test will test for 1040 business income etc. I am assumimg that means Sch C.

So, if you are not a CPA, Att, or EA, are you not permitted to do informational returns, corps, partnerships, estates, trusts, etc.

How would this be policed?

[Bees Knees]

Everyone is missing the point.

Most of us on this board are already licensed, so no big deal. Those who are not will have no problem passing the test.

That is not the issue.

The issue is a federal mandate requiring licensing means we should ALL double, or triple, or quadruple our fees.

If I hear of ANYONE who still only charges a hundred dollars to do a simple tax return after mandatory licensing takes affect, I’m going to scream.

[Snaggletoof]

Toledo Ed?

Toledo Ed, eh? Best one since "Truth or Consequences Lucretia."

We once had a sharp tax guy named Armando Beaujalois but he got tongue-tied and left. After all, who can compete with "Toledo Ed"? We missed him when cataloguing 30s-style prohibition gangsters.

Welcome to the TAXBOOK message board. We ask and answer questions, offer opinions, blow off steam, and have fun!! Some Ohio and Michigan folks participate, as well as other states. Hope you will visit us again soon...

[gkaiseril]

There is only one legal specialty and it is not taxes!

The U.S. PTO has a licensing test.

[erchess]

Omitted

CPAs Tax Attorneys and Enrolled Agents are omitted so long as they maintain their credentials as such. I would imagine that Enrolled Actuaries are also omitted but I do not know that for a fact.

[ToledoEd]

I am sure that they would pay. I have prepared taxes for IRS employees in the past, and they always paid, and they also were some of the most prepared clients that I have had. They were not secret shoppers though, They were only allowed to use any preparer for 2 years, so no undue influence with the IRS.

[gkaiseril]

I think the ABA and AICPA have been successful in omitting their members from registration and testing. I guess it is assumed if you take any law or business course, you will learn about tax changes or you are professional enough not to take on work you are not qualified for.

[erchess]

Interesting Points Dan

I agree that there will be not enough investigators to check on all of us but I was thinking that education of the public would lead to a general expectation that a preparer will have credentials on the wall of the office the way Doctors do. For example I won't let someone treat me for illness unless they have completed Medical School and either are Board Certified or are in a residency program where Board Certified Doctors are at the top of the food chain.

You raise another valid point in that EAs will no longer be the only preparers who have licenses from the Federal Government. I was hoping and even presuming that the IRS would educate the public. At least in my state I believe a Medical School Graduate who has not successfully completed a residency and is not Board Certified can still treat patients if any will come for treatment. I may be putting too much confidence in the Public and the IRS.

On the other hand it's worth a lot to me to know that soon the kind of preparer one is will not mitigate the consequences one faces for doing wrong unless of course one is the kind of preparer who cannot be found. In my perfect world we would simply make the penalties for doing wrong the same for all preparers and tell the un-enrolled that yes they may write any returns they think they can write correctly but there are consequences for writing them incorrectly.

I'm sensing discomfort with the new regime on the part of many but I remain cautiously optimistic.

[taxmandan]

After careful consideration of the input provided, the IRS believes that taxpayers, tax administration and the tax professional industry and related service providers will be better served through the implementation of a number of changes. The recommendations are addressed in detail in the following documents:

· http://www.irs.gov/newsroom/article/...217781,00.html
· http://www.irs.gov/newsroom/article/...217782,00.html
· http://www.irs.gov/newsroom/article/...217785,00.html
· http://www.irs.gov/pub/irs-utl/54419l09.pdf

Please note that none of the changes are effective for the immediate filing season beginning January 2010.

Any thoughts?

So, how many investigators are going to be hired to check tax offices for unlicensed preparers? They'll need 5,000 or so to try and even come close to chasing down the unlicensed. Then it will be a process of giving the preparer 30 days to document that they actually have a license (theIRS database will be unreliable), 60 days to appeal any proposed fines before action will be taken. By June 20th theIRS will move against those card table preparers, just as soon as they can find them.

The inept will have the shield of a national 'license' that's says they know what they are doing. The tests won't be anywhere near the level of the SEE, it will be dumbed down to the level of public school 'gradiates' else the chains will have difficulty finding 'preparers.'

Also, this will diminish the status of EAs, now all preparers will have federal licenses and the public will have even less understanding of the credentials some of us have earned.

Yeah, great idea.

[erchess]

Payment

Does anyone know whether the IRS Mystery Shoppers pay for their returns? I had assumed that they did pay and if they did not I would be quite angry. They also would not take away anything written by me without paying unless of course they gave me counterfeit cash or a bad check.