Facts About Newly Installed Tax Preparation Certification
More than 80% of United States taxpayers now use professional software or paid computers to help prepare their taxes each year. The IRS is interested in knowing who these professionals are and how qualified they are to help the average taxpayer file their returns.
As it stands now, anyone, with or without a tax preparation certification, can charge a final year’s tax filing fee to prepare someone else’s tax return; and while some of these individuals are licensed by their respective states or certified by the IRS, there is no mandate in place for paying taxpayers to meet even minimum government or professional certification standards. So basically, anyone claiming to have a better understanding of tax law and filing practices can charge a fee to file my tax return.
So after a lengthy six-month study, the IRS, in their infinite discretion, has tax consultants launched an aggressive effort to reach these wheel-free taxpayers with higher levels of education and enforcement. The hope is that higher standards for tax preparation will eventually provide greater protection for taxpayers seeking some form of support in navigating the undeniable complexities that tax season brings.
So let’s take a look at some of the changes proposed by the Internal Revenue Service. The first requirement is in the form of a Taxpayer Identification Number or PTIN. The act requires ALL paid taxpayers to register with the IRS and obtain a valid PTIN, which essentially serves as a tax preparation certification from the IRS. The process will include a compliance check to ensure that all the individuals who charge for filing someone else’s taxes are, in fact, paying their own taxes, really a no-brainer from my point of view .
The Internal Revenue Service will begin requiring all paying taxpayers to complete a competency test. This will not apply to lawyers, CPAs, and other professionals as long as they have a good reputation. However, the initial competency test will not be the end of everything. This certification will also require the pursuit of continuing professional education to a higher level. This measure also excludes practicing professionals (lawyers, CPAs, etc.) who have complied with industry continuing education requirements.
Lastly, the IRS is set to expand the ethics rules outlined by the Treasury to include ALL paid taxpayers. In previous tax seasons, this rule only applied to attorneys, CPS, and other IRS-approved agents; but with this extension, the IRS will be able to discipline any paid taxpayer for “unethical or unreputable behavior.” Despite these efforts by the IRS to standardize paid tax preparation, it is still your job to find a reputable tax professional. As a taxpayer, you are still legally responsible for the information on your return, regardless of who put it there.