500,000 of us are missing

[Bees Knees]

According to NSA, 500,000 tax preparers have yet to sign up for a PTIN. They say these preparers could be going underground by filing returns for clients as "self-prepared" returns. Thus, all of those who were giving our profession a black eye for doing unscrupulous things will continue to do so as "self-prepared" returns and bypass the PTIN process, while the rest of us who have always followed the rules now have a few extra hoops to jump through.

NSA wants IRS to educate the public on this so that taxpayers understand that all tax preparers are required to be registered.

[RitaB]

Mad Face

Those @#%tards.

TGIF, BTW

[Koss]

Missing PTIN

One guy I know has a valid PTIN, but for some mysterious reason could not renew it through the online process. He mailed in Form W-12 way back in December. Hasn't heard a thing, and the IRS hasn't cashed the $64.25 check, either.

And I've heard stories that he's not the only one experiencing this sort of thing. The IRS announced a "safe harbor" for tax pros that have tried in good faith to apply for or renew a PTIN but have been unable to do so.

His PTIN, which was issued a few years ago, has been accepted on electronically filed returns. In fact, he even has a valid EFIN, and that's working, too.

The IRS does not appear to be processing this stuff efficiently.

With that being said...

There are certainly some preparers that have been filing returns for years without signing them. Some even use consumer versions of tax software to file the returns electronically. They don't even have an EFIN.

This was a violation of IRS regs even before the mandatory PTIN. The old regs always said that you couldn't charge a fee unless you sign the return. If if someone files the return electronically through a consumer platform without using their own EFIN, then they have no way to sign the electronic return.

Some of these folks may even be clever enough to sign the taxpayer copy,, and possibly even use a bogus PTIN...

It's not going to be easy to put a stop to this sort of thing. It will take the IRS time to catch up to the technology, and develop ways to catch unauthorized preparers.

They aren't doing absolutely nothing. The IRS imposed restrictions a few years ago on the consumer versions of tax software, so that each copy can only be used to e-file five returns.

BMK

[BOB W]

I have 2 local preparers that are not answering their phone and I am getting some new clients. They are probably out of business. One of them was manually doing returns.

[taxmandan]

I wonder how they conjured up that magical number of 500K. Since they didn't really have an accurate count of preparers before the PTIN was mandated, how can the gov't have any idea how many preparers there were? Sounds like another magical gov't number out of thin air, intended to startle the people into some sort of shock at such illegal behavior.

TheIRS had trouble getting a few thousand EAs registered on a 3 year cycle, I can't imagine they are up to handling the much higher numbers of unenrolled preparers on an annual cycle.

[Questionguy101]

Two words...Bad Blood.

[Bees Knees]

I wonder how they conjured up that magical number of 500K. Since they didn't really have an accurate count of preparers before the PTIN was mandated, how can the gov't have any idea how many preparers there were?

I don't think that would be hard to figure out. IRS takes total tax returns processed for 2009 tax year that had a paid preparer sign the return, subtract total PTIN registrations for this year, and the difference equals 500,000.

[Peachie]

Yes, but

They aren't doing absolutely nothing. The IRS imposed restrictions a few years ago on the consumer versions of tax software, so that each copy can only be used to e-file five returns.

BMK

Undergrounders figured out long ago how to circumvent that process. Heck, some even buy several copies of the program to use. If you're making lots of dollars, the cost of several programs are minor.

[powerage]

*raises hand*

I'm here. I did my PTIN right through the IRS site and had zero problem with it, though my boss did have 1 number wrong that I caught right away.

[Snaggletooth]

Numbers

How many preparers HAVE been registered? If that number is 500,000 then their estimate means there must be some one MILLION preparers prior to registration in 2010. That would mean roughly one preparer for every 300+ people in the United States. And if there is a typical family of four (if that is even correct anymore), then one preparer for every 75 returns, not including business returns.

I don't have a feel for how realistic this is. I do some 200 returns, probably representing some 750-800 individuals. And I am considered a "small" preparer, doing mostly high-income returns. For the same hours involved, I could be doing 900 short forms, with EIC due diligence.

Their numbers may include an estimate of preparers who work underground and don't sign returns. I don't know whether IRS expected these to become legitimate, but if they're not signing returns I wouldn't expect many of them to take the steps to become registered.

One million tax preparers sounds like a lot. I'm sure if you took the combined membership of NAEA and NATP, their numbers would be only a small fraction of that number. For the AICPA, not all of them do taxes.

[dtlee]

Snaggletooth,

You make a lot of sense, but the IRS, in their 2009 analysis guessed that there were between .9 and 1.2 million tax preparers. See link:

http://www.irs.gov/pub/irs-utl/54419l09.pdf

I have said since the start of this that increasing the regulation of compliant tax preparers does not solve the problem caused by noncompliant tax preparers. I do not think the fact that more people are moving "underground" should come as a surprise to anyone, least of all the IRS.

[BHoffman]

Agree with Doug. The primary result of the new regulations is the added revenue to the government for charging a fee to obtain / renew our PTIN.

[erchess]

I don't see why

but the IRS seems to be doing little to communicate to the public four important facts: a preparer should show you a certificate of some kind of registration; a preparer should sign the returns; a preparer should put on the return an identifying number that is recognizably not a social security number along with the firm's address; and a taxpayer's responsibility for a return is usually not lessened by the fact that they paid someone else to do it.

There will always be some self preparers and there will always be some who want the cheapest possible preparer but proper education of taxpayers to make them aware of the risks would cut down on their numbers.

[Bees Knees]

How many preparers HAVE been registered? If that number is 500,000 then their estimate means there must be some one MILLION preparers prior to registration in 2010. That would mean roughly one preparer for every 300+ people in the United States. And if there is a typical family of four (if that is even correct anymore), then one preparer for every 75 returns, not including business returns.

No need to guess at this. According to the Treasury Inspector General for Tax Administration, 83 million tax returns were completed by paid preparers in 2007. IRS Pub 4832 says there are between 900,000 and 1.2 million individuals who prepare returns for a fee. Thus, the average number of returns prepared per paid preparer is somewhere between 69 to 92 returns.

Let’s put that into perspective. Lets say the number is 1 million paid preparers, and 25% of those did 200 returns during tax season. That means the other 75% of paid preparers did 44 returns during tax season.

This is a guess, but I think there is a huge percentage of the paid preparer community who do less than 100 returns during tax season. Most I think do it part time. The actual number of year round paid preparers who do accounting and payroll tax services is much less than the 900,000 to 1.2 million paid preparers estimated by IRS.