IRS efforts to increase accurate return preparation

[WhiteOleander]

OK, the IRS has announced their plans to require all paid return preparers be registered in some fashion. They plan to make them take a test to prove their competency. Then take continuing ed each year. I'm not really opposed to this. But, I would like to tell the IRS

"After you I'm first". The IRS needs to step up the knowlege of their own employees. I am an EA so I already have to take the cont. ed and keep up with the updates, etc. But, it is laughable some of the responses I get from the IRS regarding some things. And yet, they want all of us to believe that the lack of properly filed tax returns is because they can't keep track of who is preparing the returns.

I have copied this from the IRS site. It appears that they want us to do their job. And I don't get a gov't pension or health care.
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Tax Filing Season 2010: Efforts Increase to Ensure Accurate Return Preparation

FS-2010-2, January 2010

During the 2010 tax filing season, the Internal Revenue Service will step up its efforts to ensure paid tax return preparers are assisting clients appropriately.

Starting this week, the tax agency is sending out more than 10,000 letters to tax return preparers to remind them of their obligation to prepare accurate tax returns on behalf of their clients. These letters will inform tax preparers about the kinds of common errors the tax agency is seeing on returns.

This tax return preparer initiative coincides with the announcement by Commissioner Doug Shulman of the results of the Return Preparer Review. The effort is part of an overall effort to increase oversight of return preparers, a key part of the tax administration process.

Letters

The IRS is sending letters to paid preparers nationwide. These preparers are among those with large volumes of specific tax returns where the IRS typically sees frequent errors. Specifically, the letters will encourage return preparers to:

Review pertinent books and records of Schedule C filers.
Determine the correct itemized deductions of Schedule A filers.
Make sure those who claim dependents and the EITC are entitled to do so.
Ask first-time homebuyers the right questions to make sure they qualify for the First Time Homebuyer Credit.
The letters will also remind tax return preparers of the consequences of filing incorrect returns. This includes monetary penalties, suspension or expulsion from participation in IRS e-file, civil injunctions barring the return preparer from preparing tax returns and referral for criminal investigation.

Visits

This filing season, IRS representatives will visit thousands of tax return preparers who received these letters to discuss many of the issues described. This is part of a broader effort by the IRS to step up its efforts to ensure paid tax return preparers are assisting taxpayers appropriately. Separately, the IRS will be conducting other compliance and education visits with return preparers on a variety of issues.

In addition, the IRS will more widely use investigative tools during this filing season aimed at determining tax return preparer non-compliance. One of those tools will include visits to return preparers by IRS agents posing as a taxpayer.

During this effort, the IRS will continue to work closely with the Department of Justice to pursue civil or criminal action as appropriate. Every year, hundreds of criminal investigations are initiated against problem return preparers. In 2009, 124 were sentenced, with the average incarceration rate running 18 months.







Page Last Reviewed or Updated: January 04, 2010
Accessibility | Freedom of Information Act | Important Links | IRS Privacy Policy | USA.gov | U.S. Treasury

[Black Bart]

It's those bad ol' tax preparers

who are fouling everything up, alright. TIGTA recently said they were checking out 70K bogus FTHB returns -- no doubt the clients were all completely innocent and it was those hopelessly unethical preparers' idea to file for non-existent house purchases.

Here's a quote from the IRS website: "...The precise number of tax return preparers is not known, but the IRS estimates...there are between 900,000 and 1.2 million individuals preparing tax returns for a fee..."

...This filing season, IRS representatives will visit thousands of tax return preparers...conducting... compliance and education visits...include visits to return preparers by IRS agents posing as a taxpayer. ...IRS will...pursue civil or criminal action...against problem return preparers. In 2009, 124 were sentenced...

Let's see now...roughly one million preparers less 124 rotten apples per year = hmmm...well, yes...at that rate IRS' problems will be history in no time.

While I'll be lookin' for IRS snoops and don't expect to say anything awful enough to earn me a trip to the calaboose, I'll be very surprised indeed if they make "thousands" of in-person office visits.

I know they want us to "tighten up" but hellfire, aside from throwin' the obvious crooks outta the office, how much more can we ratchet up the pressure on ordinary guys without comin' across as IRS auditors?

[JG EA]

Two day old breaking news.

I think the timing of this is very interesting.

Is it true that honest people worry when someone is questioning his or her integrity while dishonest people could care less. So what will this do really.

I had so many of my friends come up to me to see if I’d be affected by this big IRS deal. It gave me a chance to explain EA’s, but the general impression I got is that it lowered their opinion of the industry as a result.

I think the timing of this is very interesting. Do you think Turbo Tax lobbied for it?

[Snaggletooth]

Interesting Theory

Yes JFG, interesting and I hadn't thought of that.

But I don't really know. Our industry has had egg on our face for a long time. The other day I mentioned the old MONEY magazine annual reports where this fictitious guy goes to 50 different tax experts and gets 50 different refunds/payments.

The govt has definite upsides and downsides by promoting TurboTax. By defining the protocol for the software, it can absolutely stop some entries dead in their tracks. Put an "X" in the wrong box and you cannot claim some credit, some deduction, or some dependent. But then there is the guy who keeps padding his Schedule A contributions until he is happy with the refund showing at the top of the screen.

For whatever may be an underlying reason, I agree the timing is unusual. From a utilitarian standpoint it would make more sense to have a press release when more of the details are known.

[erchess]

Long Long Ago

When the first income tax was put in a tax collector would visit the taxpayer and the two men would figure out what the taxpayer's tax was. Either might write the document and I imagine both would sign it and of course the taxpayer would pay since there was no withholding or estimated tax payments. There was normally no one to assist the taxpayer although the collector had sworn or affirmed that he would collect only the tax that was due. His interest was different from that of the taxpayer however because his pay was a percentage of the tax he collected. (I say he advisedly because the taxpayer was almost always male and the tax collector absolutely was always male.) There were also employees who reviewed the work done by the collector and the taxpayer but these collectors made up I believe the bulk of the government employees involved in collecting income tax.

I wonder if some in the IRS want to go back to that day and make all of us the tax collectors and perhaps do away with self filers? I'm sure they would not go back to having tax ciphered on blank paper by hand but the job of the tax pros and how they were paid could in theory be revived.

[geekgirldany]

Got The Letter

Well I got the letter from the IRS telling me to make sure that I prepare accurate tax returns. Then says that they will be coming to visit preparers that received this letter the last week of January.

Anyone else got the letter yet?

[BHoffman]

I received a letter titled "You must use form W-2, W-2G, or 1099-R information when submitting electronic returns". Made no mention of a visit.

[geekgirldany]

I got that one too earlier this week. The letter I got today says:

"The Internal Revenue Service is taking a number of steps to contact paid tax return preparers to improve the accuracy and quality of filed tax returns and heighten awareness of preparer responsibilities. We are sending letters to and visiting a segment of the return preparer community to provide information on the kinds of errors we are seeing. This letter describes common errors made by taxpayers and return preparers and your general responsibilities as a return preparer.

We encourage you to review this information now to ensure you fulfill your responsibilities and avoid making these common errors. Beginning the last week of January, IRS representatives will visit many of the preparers who receive this letter to discuss their obligations as a return preparer."

So it says it will visit many of the preparers. I do alot of Schedule C and S-Corps. The Schedule C errors, EIC, and First Time Homebuyers credit are listed as the most common problem areas.

[BOB W]

Well I got the letter from the IRS telling me to make sure that I prepare accurate tax returns. Then says that they will be coming to visit preparers that received this letter the last week of January.

Anyone else got the letter yet?

Yup> you are on there list for a visit. Sorry to hear about. But more than likely it will be a friendly visit. If I got the letter I would not be too concerned.

The only down side is that they are probably using the interview as a basis for who they are going to send a "shopper" to. So be super efficient and show all your check sheets, check lists and whatever so they know you are up to speed.

[S T]

IRS Letter

Yes I received the the "You Must Use Form W-2, W-2G or 1099-R Infomration when submitting Electronic Returns" as well

It was dated January 4, 2010

I can't remember a time when I have ever prepared a return "WITHOUT THESE DOCUMENTS" exception being in late March or April when the taxpayer was not able to obtain a W-2 form and I had to prepare witha "substitute 4852 form ?"

Maybe that is why the letter, that I filed "one" return with a substitute form.

Good Luck Dany! - Keep us posted

Sandy

[geekgirldany]

Nah, I'm not really concerned about it.

The only checklist I have is in my head except for the EIC. That is in the tax program and if I have to I check TTB for requirements.

[taxmandan]

Nah, I'm not really concerned about it.

The only checklist I have is in my head except for the EIC. That is in the tax program and if I have to I check TTB for requirements.

I'm curious how you show that you asked all the questions to complete a tax return if you don't have some written checklist or organizer to follow? As theIRS increases enforcement efforts against preparers, it seems to me that written records are a good CYA move.

[gkaiseril]

The IRS has posted Pub 4832 Return Preparer Review that may provide some insight into the IRS' direction and background about this issue.

[Black Bart]

Same here.

Nah, I'm not really concerned about it.

The only checklist I have is in my head except for the EIC. That is in the tax program and if I have to I check TTB for requirements.

Too, I don't think the second letter necessarily means you will get a visit since it said "preparers" and not you specifically. Usually their big promotions are a lot of bluster and a paperstorm.

[gkaiseril]

You might want to look at the IRS web site and take the IRS's due diligence course for the EITC. Not only should you complete your software's EITC but you might want to record any other question you asked and the clients response. The additional questions may need to done when there is any possibility or question about who can claim the child.

Also, if the child's parents are divorced, the divorce decree is no longer enough for one parent to claim the child, you should have the IRS form releasing the child as an exemption. The divorce decrees do not provide enough data to meet the documentation standards of the IRS.