In a fresh move to instill greater accountability among tax preparers, the IRS is to implement certain measures to ensure greater professionalism and integrity in companies and individuals who provide tax preparation services. Under these new regulations, tax preparers need to be registered with the IRS, pass competency examinations and be regularly tested thereafter in order to be certified to prepare tax returns.
To many in the industry, such a move for greater monitoring of tax preparers is long overdue. It has finally come about after some covert investigation proved the need for tighter control to ensure the taxpayers receive rightful and competent tax preparation service for the money they pay. In separate investigations, the Government Accountability Office and the US Treasury inspector general for Tax Administration (TIGTA) both produced similar results of a high degree of incompetence.
The Government Accountability Office investigation showed only 2 out of 19 tax preparers reviewed produced the correct tax liability and refund amounts in their tax returns. Likewise, when the TIGTA sent its auditors posing as taxpayers seeking tax preparation services, they found 11 out of 16 tax preparers made errors in simple tax returns. None of the tax returns involved complex issues but rather all of them needed only straightforward calculations of mortgage deductions, self-employment taxes and education credits.
Worse still, some tax preparers did not hesitate to commit fraud in their tax returns. Some inflated their deductions and one even made a deduction for a charitable contribution despite being clearly told that no such contribution was made.
In addition to these gross misdeeds, the IRS also poorly maintains its database of these tax preparers thereby compounding the problem. The details of tax preparers are kept in 22 different systems that are not integrated.
It is not unreasonable to imagine that such massive oversight of all tax preparers nationwide will take several years to implement fully. But the IRS is starting now by sending letters to 10,000 tax preparers who have been known to commit the errors most commonly seen by the IRS. These will be followed up with visits by undercover IRS agents posing as taxpayers ready to blow the whistle on tax preparation cheats.
As taxpayers, your role would be to make sure you engage a reputable tax preparation company or a financial professional like an accountant, tax lawyer or enrolled agent. Never engage the services of someone who says he can get you a substantial tax rebate even before seeing your income. You should also refrain from paying the tax preparer a portion of your tax break. Tax preparers are paid according to the fee they agree with you, no more and no less.
Make sure the tax preparer signs to certify that he or she prepared the tax return on your behalf. Each tax preparer should also state his or her registration number along with the signature. Then once you receive back your tax return, check through it for inaccuracies and errors. If there is a clear action of fraud (even if it may benefit you in terms of lower taxes), do not hesitate to report the preparer to the IRS. Your identity will be kept confidential.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.