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IRS’s Regulation of Paid Tax Return Preparers

Submitted by admin on Tue, 8/2/2011 - 12:00 am

Most individuals, 8 out of 10, now rely on software or a paid tax preparer to file their tax returns because of the increasing complexity of the U.S. tax code, but the preparers often make mistakes, and some have criminal backgrounds. The IRS wants to set up a system to regulate them, but the program won’t be fully in place until 2013.

This has Congress worried because of the rapidly growing number of preparers and errors found on returns. For example, errors related to refundable tax credits have led to an estimated $106 billion in improper payments over the last decade.

In response, the IRS in 2010 launched an oversight program to aid in limiting or stopping completely, the intentional abuses and unintentional mistakes. It wants preparers to register with the IRS, pay an application fee, and be assigned a unique identification number (PTIN).

To date, the service has registered more than 717,000 preparers. Next year the IRS will start requiring a competency test and annual continuing education for many preparers who are not a CPA, attorney, or enrolled agent. The intentions is to produce meaningful results that benefit taxpayers and protect the integrity of the tax system.