Archive for IRS
The following is a press release from the IRS:
WASHINGTON — The Internal Revenue Service has started sending out more than 10,000 letters to tax return preparers nationwide to remind them of their obligation to prepare accurate tax returns on behalf of their clients.
Also, during the 2011 filing season, IRS representatives will visit approximately 2,500 tax return preparers who received these letters to further discuss their responsibilities as a return preparer and to verify their compliance with existing requirements.
The tax agency is sending the letters to paid preparers who completed tax returns in which the IRS has identified common errors. The letter includes an enclosure that reminds tax return preparers of their responsibilities and consequences of filing incorrect returns.
While most return preparers are professionals who provide honest and excellent service to their clients, some make basic errors or engage in fraud and other illegal activities. The IRS will continue to work closely with the Department of Justice to pursue civil or criminal action as appropriate.
The IRS urges taxpayers to be careful when choosing a preparer. Reputable return preparers will ask to see receipts and will ask multiple questions to determine whether expenses may be claimed as deductions or otherwise qualify for favorable tax treatment. By doing so, they are trying to help their clients avoid penalties, interest or additional taxes that could result from an IRS examination.
These letters and planned visits are another step in increased IRS efforts to heighten awareness of preparer responsibilities and to ensure paid tax return preparers are assisting taxpayers appropriately. The IRS is continuing its efforts to implement the recommendations IRS Commissioner Doug Shulman announced in January following a comprehensive six-month study of the tax return preparer industry.
Reminder of New Registration Requirement for All Return Preparers
The IRS recently launched a new online application system to obtain a Preparer Tax Identification Number (PTIN). All paid tax return preparers who prepare all or substantially all of a tax return are required to use the new registration system to obtain a PTIN. Individuals who obtained a PTIN prior to Sept. 28, 2010, need to reapply under the new system but generally will be reassigned the same number.
Applicants must pay $64.25 to obtain or renew a PTIN. Access to the online system is available through the Tax Professionals page on this website. Receipt of a PTIN will be immediate after successful online registration. Alternatively, a paper application may be submitted on Form W-12, IRS Paid Preparer Tax Identification Number Application. Preparers choosing this alternative can expect a response time of four to six weeks.
For more, see the Tax Professionals page on this website, which features step-by-step instructions and multiple FAQs on the new registration system.
IRS Announces New Member for the Electronic Tax Administration Advisory Committee
Posted by: | CommentsThe following is a press release from the IRS:
WASHINGTON — The Internal Revenue Service today announced the selection of seven new members and a chairman for the Electronic Tax Administration Advisory Committee (ETAAC).
ETAAC provides an organized forum for discussion of electronic tax administration issues and supports the goal of increasing electronic interactions between tax professionals and the IRS.
“The IRS is pleased with the continued support of the ETAAC,” said Cecille M. Jones, deputy director, IRS Electronic Tax Administration and Refundable Credits. “ETAAC offers constructive observations and suggestions about current or proposed policies, programs and procedures.”
The new members will replace the outgoing members whose terms expired and will ensure continuity of the committee. The new members are:
Sean Brennan of Philadelphia, Pa., is president of Brennan and Associates. He is a certified public accountant (CPA) e-filing both individual and business tax returns. Brennan has been teaching accounting and taxes at the college level for the past 13 years.
Alice Burnett of Lawrenceville, Ga., is the owner of Burnett & Associates. Her consulting firm offers operational expertise regarding electronic payment options, and she worked on the implementation and operation of the Electronic Federal Tax Payment System (EFTPS).
Ned Drinker of Conshohocken, Pa., is the tax manager of Oberthur Technologies of America Corporation. He is responsible for preparing and e-filing corporate returns, managing federal and state audits, as well as implementing sales tax software.
Douglas Simon of Lincolnshire, Ill., is the president and founder of HS&A Payroll Services, Inc. He is responsible for a suite of payroll processing solutions. Simon works with a wide range of companies and oversees both tax filing and compliance operations.
David Sullivan of East Greenwich, R.I., is tax administrator for the Rhode Island Division of Taxation. He is responsible for creating the E-Government Unit to assist in enhancing and improving interaction with customers using new technologies.
T.J. Turner of Sarasota, Fla., is director of Income Tax Research for Vertex Inc. He is responsible for leading the software development and tax accuracy of Vertex’s corporate income tax product suite.
Harris Widmer of Fargo, N.D., is a CPA and a partner in Widmer Roel PC. He provides tax consulting, audit,, and financial planning services to a wide variety of businesses and individual clients.
Phil Poirier of San Diego, Calif., has been elected by the members to serve as Chairman of ETAAC for 2010-2011. Poirier is vice president, Government, Consumer Division, at Intuit Inc. He is responsible for government initiatives relating to Intuit’s consumer tax and personal finance businesses (TurboTax, Quicken and Mint.com).
Each June, the ETAAC submits a report to Congress reporting on the progress of the IRS’ electronic tax initiatives. ETA
New Online Registration System for Paid Tax Return Preparers is Now Available
Posted by: | CommentsThe following is a news release from the IRS Media Relations Office
IR-2010-99, Sept. 28, 2010
WASHINGTON — As part of an initiative to ensure that tax return preparers are competent and qualified, the Internal Revenue Service today issued final regulations requiring paid tax return preparers to register with the IRS to obtain a Preparer Tax Identification Number (PTIN). A new online application system to obtain a PTIN is now available.
All paid tax return preparers who prepare all or substantially all of a tax return are required to use the new registration system to obtain a PTIN.
Access to the online application system will be through the Tax Professionals page of IRS.gov. Individuals who currently possess a PTIN will need to reapply under the new system but generally will be reassigned the same number.
“Getting a new, industry-wide registration system in place is essential to our efforts to improve the standards and oversight of tax return preparation,” said IRS Commissioner Doug Shulman. “These efforts are essential to the future of the nation’s tax system. This will create higher standards for the tax preparation community and ensure quality service for taxpayers.”
The IRS set up a special toll-free telephone number, 1-877-613-PTIN (7846), that tax professionals can call for technical support related to the new online registration system.
Applicants will pay a $64.25 fee to obtain a PTIN, which will be valid for one year. As part of that fee the IRS will receive $50 per user, as authorized by final user fee regulations issued by the IRS today, to pay for technology, compliance and outreach efforts associated with the new program. And a third-party vendor will receive $14.25 per user to operate the online system and provide customer support.
Receipt of a PTIN will be immediate after successful online registration. Or a paper application may be submitted on Form W-12, IRS Paid Preparer Tax Identification Number Application, with a response time of four to six weeks. Before registration, applicants should consider that the date the PTIN is assigned is established as the annual renewal date.
Individuals without a Social Security number will also need to provide one of the following: Form 8945, PTIN Supplemental Application for U.S. Citizens Without a Social Security Number Due to Conscientious Religious Objection, or Form 8946, PTIN Supplemental Application for Foreign Persons Without a Social Security Number.
The new online registration system and final regulations are part of a series of steps underway to increase oversight of federal tax return preparation.
In January, Shulman announced the results of a comprehensive six-month review of the tax return preparer industry, which proposed new registration, testing and continuing education of federal tax return preparers. With 60 percent of American households using a tax preparer to help them prepare and file their taxes, higher standards for the tax return preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term. Currently, many return preparers do not have to meet any government or professionally mandated competency requirements before preparing a federal tax return for a fee.
Work on Testing, Continuing Education Components Continue
The start of the PTIN registration process begins as the IRS continues to review the testing and education components of the return preparer initiative as recently announced in proposed regulations that would amend Treasury Circular 230.
The proposed Circular 230 regulations announced that attorneys, certified public accountants and enrolled agents would not be subject to additional testing or continuing education requirements in order to obtain a PTIN. These professionals are currently subject to strict professional standards of conduct and ethics.
Pending finalization of guidance, the IRS has under serious consideration extending similar treatment to a discrete category of people who engage in return preparation under the supervision of someone else — for example, some employees who prepare all or substantially all of the return and work in certain professional firms under the supervision of one of the above individuals who signs the return.
The IRS will provide guidance defining this area in the coming months, and will continue to seek feedback during this process to help ensure the creation of a fair, equitable oversight system that minimizes burden.
On the continuing education requirements, the IRS recognizes the need to have transition rules in place and plans to issue additional guidelines by the end of the year.
For more, see the Tax Professionals page on IRS.gov, which features an FAQ page on the new registration system and who needs a PTIN.
Classes at The Income Tax School featured for new tax preparer rules
Posted by: | CommentsThe following is an article by John Reid Blackwell from the Richmond Times-Dispatch, Sept. 21, 2010. View the original here.
Starting next year, professional tax-return preparers will have to meet new requirements to prepare federal income-tax returns.
The requirements, announced by the Internal Revenue Service this year, include registering with the IRS, passing a competency test, and completing 15 hours of continuing education in topics such as tax laws and ethics.
That means an estimated 900,000 to 1.2 million people nationwide who sell tax-return preparation services will need to register and pass an exam.
“The majority of them will need a review course to prepare for the IRS exam,” said Chuck McCabe, president and chief executive officer of Henrico County-based Peoples Income Tax Inc. and The Income Tax School. “All of them are going to need continuing education.”
While it is unclear exactly how many tax preparers in Virginia will need to enroll in training, the Virginia Community College System is preparing for a wave of students by offering continuing-education classes geared toward the new IRS requirements.
The community college system has signed an agreement with The Income Tax School to provide e-learning courses in tax preparation through most of its campuses around the state, said Mindy Fast, coordinator of customized training and continuing education for the community college system.
Tax preparers may sign up for a variety of courses of different length and cost. Among those being offered is a comprehensive, 20-lesson course designed to prepare them for the new IRS competency test, McCabe said.
McCabe said The Income Tax School is offering the courses under a revenue-sharing agreement with the community college system.
“A lot of tax preparers, particularly those that have started in the past 20 years when tax return software was introduced, use software to prepare the returns,” McCabe said. “The software does so much for them, they do not know the tax law. They need to know the law to make sure they prepare the returns correctly.”
The Income Tax School is a private career school that was spun off this year from Peoples Income Tax. The school, which has been offering tax-preparation courses commercially since 1993, also is providing textbooks and materials to the community college system for on-campus courses.
IRS Nationwide Tax Forums Report
Posted by: | CommentsI just returned from the last of the six IRS Nationwide Tax Forums in San Diego, which had about 2,000 attendees. The previous Forum in Las Vegas had over 6,000 attendees. The first two Forums in Atlanta and Chicago in late June and early July were uneventful. Then the flood gates opened in Orlando and New York City with 3,000 attendees each. Beginning with Orlando, our booth has been swamped with tax professionals and tax business owners seeking solutions to their needs for tax education. A growing number of tax professionals are concerned about complying with the new tax preparer regulations (link to videos).
At the NY Forum I met privately for 90 minutes with the IRS Return Preparer Implementation Project Lead for Testing and Continuing Education to provide input on curriculum standards. He indicated that IRS plans to review the content of each Continuing Education (CE) program of every approved provider. This process will be a major project and will most likely result in the Continuing Education requirement being delayed until 2012 instead of 2011. CE Providers will be assessed program review fees, which will result in higher prices for CE. At the Orlando Forum I talked with the director of the IRS Office of Professional Responsibility who is leading the IRS Tax Preparer Regulation program. She is committed to eliminating unqualified tax preparers including, ultimately, CPAs and attorneys who prepare tax returns without adequate education in the tax laws. I also had discussions with the director of the IRS National Public Liaison office who is a member of the IRS team for Preparer Regulation.
The tax industry vendors in the Expo Hall included the usual tax software companies, service bureaus, franchisors, financial services firms and providers of various resources for tax professionals, including bank products. Notably, several new vendors surfaced that provide stored value credit cards as an alternative to traditional RALs and RACs. In San Diego we were next to one and directly across from another. I recommend looking into the Get It Prepaid MasterCard from ADVENTafs info@adventafs.com. This RAL/RAC alternative will enable you to collect your fees and your clients to get their refunds quickly at a very low cost. With the elimination of the Direct Deposit Indicator, the price of RALs will increase and fewer taxpayers will be approved. However, RALs will not go away. Who will provide RALs and what they will cost is still not determined. We may not have details on all the available options until November.
IRS should be announcing preparer registration procedures soon after Labor Day. We can also expect an announcement about Continuing Education during September. As far as we know, the IRS Exams are still scheduled to be available by July 2011 and preparers will have until 12/31/2013 to pass the test. Anyone who is not registered as a tax preparer by this December 31st will not be able to prepare tax returns during the 2011 tax season. Therefore is you will need to hire tax preparers, you should recruit them and get them trained and registered before the end of this year.
IRS Removes Debt Indicator for 2011 Tax Filing Season
Posted by: | CommentsIR-2010-89, Aug. 5, 2010
WASHINGTON — The Internal Revenue Service today announced that starting with next year’s tax filing season it will no longer provide tax preparers and associated financial institutions with the “debt indicator,” which is used to facilitate refund anticipation loans (RALs).
“As we prepare for tax season every year, we look at past practices and consider whether they still make sense. We no longer see a need for the debt indicator in a world where we can process a tax return and deliver a refund in 10 days,” IRS Commissioner Doug Shulman said. “We encourage taxpayers to use e-file with direct deposit so they can get their refunds in just a few days.”
So far this year, more than 95 million tax returns have been e-filed, representing more than 70 percent of tax returns.
“Refund Anticipation Loans are often targeted at lower-income taxpayers,” Shulman said. “With e-file and direct deposit, these taxpayers now have other ways to quickly access their cash.”
The IRS has been reviewing refund settlement products, such as RALs and Refund Anticipation Checks (RACs), as part of the Return Preparer Review released in January. Specifically, the IRS announced that it would study refund settlement products.
RALs are loans secured by a taxpayer’s anticipated tax refund. Currently, tax preparers who electronically submit a client’s tax return receive in the acknowledgment file an indication of whether an individual taxpayer will have any portion of the refund offset for delinquent tax or other debts, such as unpaid child support or delinquent federally funded student loans. This acknowledgment is known as the debt indicator, and is used as an underwriting tool for RALs.
The IRS announcement would remove the debt indicator starting with the upcoming 2011 tax filing season. The IRS noted that taxpayers will continue to have access to information about their tax refunds and any offsets through the “Where’s My Refund?” service on IRS.gov.
RACs are temporary bank accounts established on behalf of a taxpayer into which a direct deposit refund can be received and out of which a bank typically issues a payment to the taxpayer.
With both RALs and RACs, tax preparation and product fees are subtracted directly from the refund, and the taxpayer does not make any “out-of-pocket” payments. They are frequently marketed to taxpayers who do not have cash to pay for professional tax preparation services.
In a related effort, the IRS plans to explore the possibility of providing a new tool for the 2012 tax filing season to give taxpayers a mechanism to use an appropriate portion of their tax refund to pay for the services of a professional tax return preparer. The IRS plans to engage with taxpayers, consumer advocates and the tax return preparer community to consider whether providing this option would be a cost-effective way for consumers to pay for tax return preparation services.
IRS Releases Proposed Regulations Regarding Fees for Preparer Tax Identification Numbers
Posted by: | CommentsThe Internal Revenue Service has released proposed regulations that would establish a fee for individuals who apply for a preparer tax identification number (PTIN). The proposed regulations (REG-139343-08) would establish a fee of $50, payable to the IRS, to cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program. The proposed regulations would also provide for an additional fee (expected to be lower than $50) to be charged by the third-party vendor chosen to operate the new online system. That fee amount is expected to be announced soon, as well as additional details about the launch of a new online application system. These fees could change in future years as program costs are reevaluated. Tax professionals and other interested parties have until Aug. 23, 2010, to submit comments regarding the proposed regulations.There is a hearing on these proposed regulations scheduled for August 24.
Click here for the full IRS text of the rules.
The New Rules for Paid Tax Preparers
Posted by: | Comments.jpg "IRS tax")
If you employ seasonal tax preparers how can you ensure that they are able to pass the IRS competency exam? Many tax preparers rely too much on tax software and don’t have enough tax knowledge to pass the IRS exam. We will make our tax preparers can pass the final exam of our Comprehensive Income Tax Course with a grade of at least 90%. Those who do not pass our test will be required to take the 60-hour course, either in a live class or online this fall. Employees who also prepare business returns will be required to either test-out of or take the Comprehensive Course plus our Small Business Level I course (links below). What are your plans to enable your tax preparers to pass the IRS competency exam?Comprehensive: http://www.theincometaxschool.com/shop/shopexd.asp?id=4
Comprehensive & Small Business I:
http://www.theincometaxschool.com/shop/shopexd.asp?id=116
