IRS Report Suggests Federal Oversight Will Benefit Taxpayers and the Tax Preparer Industry
Today Internal Revenue Service Commissioner Doug Shulman issued the results of a six-month study that will impose new requirements for paid tax preparers to help reduce fraud, improve compliance and close the tax gap.
California, New York and Oregon are the only states that oversee paid tax preparers; however, Maryland is also working to implement legislation it passed in 2008.
The IRS proposal includes setting new registration, testing and continuing education requirements for all paid tax preparers. Attorneys, certified public accountant (CPAs) and IRS enrolled agents (EAs) will be exempt. Many of the requirements outlined in the recommendation are similar to what California already requires for its paid tax preparers.
In California, anyone who prepares income tax returns for a fee and is not a licensed attorney, CPA or EA, is required by law to register with the California Tax Education Council (CTEC). Each CTEC-registeredtax preparer (CRTP) has to complete a set amount of education on tax laws and obtain a surety bond to protect clients against fraud.
The IRS initiative is expected to take several years to implement. Below is a summary of the proposed IRS requirements compared to CTEC requirements:
Proposed IRS Requirements | Â | Â | Â | CTEC Requirements | ||
• | All tax preparers must obtain a preparer tax identification number (PTIN) | • | CRTPs must obtain a CTEC identification number | |||
• | All tax preparers must pass a competency exam from the IRS | • | CRTPs must pass a competency exam from a CTEC-approved education provider | |||
• | All tax preparers must complete 15 federal hours of continuing education each year | • | CRTPs must complete 20 hours (federal and state) of continuing education each year |
CTEC is a nonprofit organization that was established in 1997 by the California State Legislature to protect taxpayers by registering unlicensed tax preparers within the state. Unregistered tax preparers caught breaking the law may face penalties up to $5,000 from the Franchise Tax Board. To learn more, visit www.ctec.org or call (877) 850-2832.
Contacts:
CTEC
Gigi Campo
PR Director
916-296-6913 (Cell)
916-447-8229
(Office)
gcampo@ctec.org