Snags' Poll adapted by erchess

[erchess]

Will preparer registration, efile mandate, ptins and other recent developments in our industry be on balance a good or bad thing?

[Lion]

Money

They're costing us "good guys" money, but we're already following the rules!

[Black Bart]

It seems like a mixed bag to me.

While the test should get rid of some inadequate preparers, I believe many will simply stop signing returns (if they ever did) and it's likely nothing will happen to them (hasn't before & IRS doesn't care for small potatoes). Their draw is a low fee and, if the refund's right, many of their customers couldn't care less about signatures.

At the same time it'll force out some ethical older preparers who do good work, but may quit since they're close to retirement anyway. They could probably pass, but if not then imagine the professional embarrassment as it became known ("Yes, yes, I know I've done your taxes for 30 years, but I flunked a tax test and have to quit now").

It's too bad most tests contain material completely irrelevant to our practices anyway, but when incompetence becomes a large and serious problem, then I guess IRS has to draw a line somewhere -- even if it throws out babies with the bathwater.

Still, I've got lots of sympathy for return-signing, rules-following mom and pop shops (the "good guys") who may/may not be able to cut the test mustard and for whom tax season equals economic survival (some of these preparers are far more "noble" than the public whom IRS is trying to protect from us). I'd be a whole lot more worried myself if I hadn't lucked out on that EA exam a few years ago (glad I don't have to choose between signatures and groceries).

[origun]

Oregon's licensing

I am a practitioner in Oregon and an EA. Oregon has had a 2-level testing and licensing program for tax practitioners for a long time. (I've been in the business 14 years and it goes back way further than that.) I think that the consensus among practitioners is that it works and is a good thing for all. I renewed a while back and believe the cost was $90 which I don't find prohibitive. I have heard that the IRS finds way fewer errors on Oregon professionally prepared returns than elsewhere (although I don't have specific statistics at my fingertips). The state board that oversees the tax practitioners does check on unlicensed preparers and imposes heavy fines when unlicensed preparers are discovered. We all have to have our state licenses hanging in our offices.

So...I am not as negative about the federal program as many of you. We'll have to see how it is implemented. Perhaps it would have been better if each state did the testing and licensing instead of the feds!

[taxmom34]

does the IRS really check on returns not signed by paid preparers? how do they do this? if they did it is probably a very small percentage (1% or 2%?), i've only seen in newspapers where IRS caught a paid preparer who signed a return who was grossly fraudulent . if someone does not sign a return as a paid preparer how are they going to catch them?
turbotax lets you buy their cd products and unlimited returns can be prepared (only 5 efiled, IRS rule) and self prepared is printed on the return.
i don't think the guy who is not signing returns as a paid preparer is even aware of the new testing.

[David1980]

does the IRS really check on returns not signed by paid preparers? how do they do this? if they did it is probably a very small percentage (1% or 2%?), i've only seen in newspapers where IRS caught a paid preparer who signed a return who was grossly fraudulent . if someone does not sign a return as a paid preparer how are they going to catch them?
turbotax lets you buy their cd products and unlimited returns can be prepared (only 5 efiled, IRS rule) and self prepared is printed on the return.
i don't think the guy who is not signing returns as a paid preparer is even aware of the new testing.

I don't believe they do. However, they could... at least some of them. In some practices, specifically where they cater to low income EIC clients, the ability to pay for the tax return out of the refund is a big deal. So you get into the need for bank products. Now, you could claim that you efile 1000 returns and all 1000 are self prepared, but this should start to become visible to the IRS as what's really going on. With the TurboTax 5 efile returns you'll have to get paid some other way. Now, my guess is the taxpayer that is willing to go to Shady Slim's Tax Prep because his returns are $5,000 more than everyone else,... well I don't think Shady Slim is going to have any more trust in the taxpayer than the taxpayer should have in getting an honest return out of Shady Slim. So payment up front or broken knees?

I think what will happen instead is borrowing/sharing PTINs. I don't really think this test is going to be that hard. Enough that not everyone who prepares a return has one, but not so hard that they aren't able to get one person to pass in a practice with 5 preparers. And if they had to, the unethical preparer in need of a PTIN could go pay to get their own taxes done and steal the PTIN of that preparer. Scary thought...

[taxea]

I prepare returns in Hawaii and there are no state regulations here. One only needs to get a business license and hang out a sign.

Numerous non-regulated preparers do not do any continuing education year to year and don't follow the codes. Sure it is difficult for the IRS to find them but at least, when they do, they will be weeded out.

I applaud the IRS for finally addressing this issue and I have no problem with pointing them in the right direction.