Make Sure Your Tax Prepare is Certified

If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely. Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.

Here are a few points to keep in mind when choosing someone else to prepare your return:

  1. Check the person’s qualifications. Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics. New regulations require all paid tax return preparers including attorneys, CPAs and enrolled agents to apply for a Preparer Tax Identification Number — even if they already have one — before preparing any federal tax returns in 2011.

  2. Check on the preparer’s history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Professional Responsibility for enrolled agents.

  3. Find out about their service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.

  4. Make sure the tax preparer is accessible. Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.

  5. Provide all records and receipts needed to prepare your return. Most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.

  6. Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.

  7. Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.

  8. Make sure the preparer signs the form and includes their PTIN. A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.
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United States District Court for the District of Columbia rule against IRS!! continued updates

Update July 18, 2014

Mixed news for registered tax return preparers...those who passed IRS’ test, took the requisite continuing education courses and got an official certificate from the agency before a court ruled that the regulatory framework was not valid. They won’t appear in IRS’ upcoming public database of preparers. Only CPAs, attorneys, enrolled agents and unenrolled preparers who fulfill the requirements of the new IRS voluntary program will be listed. The database will debut next year. But they will get a break to satisfy the voluntary certification standards, IRS says. They are exempt from the six-hour refresher course and quiz on tax law, and need only take eight hours of continuing education courses to qualify for 2014 and 15 hours next year. So they at least receive some benefit for passing the old test.

Other unenrolled preparers needn’t pass and take the refresher course to get the voluntary certification, either: Preparers credentialed in Calif. and Ore., and those certified by the Accreditation Council for Accountancy and Taxation as an accredited business accountant/advisor or an accredited tax preparer. Anyone who passed the first part of the enrolled agent’s examination in 2013 or 2014. And some reviewers and instructors in IRS’ voluntary income tax assistance program.

Meanwhile, IRS’ voluntary credential for preparers faces a court challenge. The American Institute of Certified Public Accountants recently filed a lawsuit claiming that the new program is an impermissible end run around the court decision that invalidated the registered tax return preparer rules. It also alleges that IRS didn’t give stakeholders ample time to comment before rolling out the program.

Update July 03, 2014

It’s full speed ahead for IRS’ voluntary credential for unenrolled preparers. Despite complaints from groups representing licensed preparers, the agency has officially unveiled its plan to offer a voluntary annual filing season certification to return preparers who aren’t attorneys, CPAs or enrolled agents. Under the program, 18 hours of continuing education would be required each year...two hours on ethics, 10 hours of federal tax law topics and a six-hour refresher course on federal tax law. that includes a 100-question quiz.

Test takers must score 70% or higher to pass. Preparers in states that have their own testing requirements, such as Calif. and Ore., as well as preparers who previously passed IRS’ registered tax return preparer exam, can skip the refresher course and test and take three hours of tax law updates instead.

The program will be in place for the 2015 filing season, but only 11 hours would need to be earned by the end of 2014 to qualify for 2015: Two hours on ethics, three hours of federal tax law topics and the six-hour refresher course with the quiz. Applicants exempt from the refresher course also have more lenient requirements for 2014: Three hours of tax updates, three hours of tax topics and two on ethics.

Bad news for unenrolled preparers who don’t opt into IRS’ voluntary program: They’ll lose the ability to represent their clients in audits or claims for refund on returns that they prepare and sign after 2015. Only those in the voluntary program will have that right. But they can’t assist clients before IRS Appeals or collections.

The Service will have a public database of preparers ready by early 2015. It will list preparers who have a preparer tax identification number and are CPAs, attorneys or enrolled agents plus those who participate in the voluntary program. The database will also list the professional credentials of each type of tax pro.

IRS must prove fraud to penalize preparers for aiding tax understatements, an appeals court says. If the agency does not show clear and convincing evidence that a preparer’s actions resulted in an understatement of a client’s tax liability, the penalty doesn’t apply. The aiding-and-abetting penalty is steep...$1,000 per 1040 and $10,000 for each corporate return. In this case, the Service was seeking $148,000 from a preparer but was not able to prove fraudulent intent (Carlson, 11th Cir.). The issue may end up in the Supreme Court. Two other appeals courts say that IRS can prevail if the preponderance of evidence shows a willful understatement.

Update June 06, 2014

IRS’ voluntary credential idea for unenrolled preparers is getting lots of flak from organizations representing CPAs, enrolled agents and other tax pros. They’re troubled by the speed at which the Service is moving on the issue...the agency hopes to implement the scheme by Jan. 2015, in time for next year’s filing season. And the groups think the requirements for qualifying for the credential are too lax: Taking 15 hours of yearly continuing education and passing a quiz to get course credit.

Don’t expect IRS to derail the plan, but odds favor changes or possibly a delay. IRS eases sanctions on tax professionals whom it previously disciplined. They can get preparer tax ID numbers again and prepare returns for pay. But they’re still not allowed to represent clients before the Revenue Service in audits, conferences, appeals and the like. This relief applies to individuals who were disbarred or suspended between Aug. 2, 2011, and Feb. 11, 2014, a result of the court ruling that nixed the Service’s regulatory scheme for unenrolled preparers. The court said that preparing returns isn’t covered by rules regulating practice before the agency.

Update May 23, 2014

The Supreme Court won’t weigh in on IRS rules for unenrolled preparers. The Revenue Service has decided against a Supreme Court appeal of a case that invalidated its regulations requiring preparers other than enrolled agents, CPAs or lawyers to pass a competency test and take annual continuing education courses. The Supreme Court won’t weigh in on IRS rules for unenrolled preparers.

Another regulation option being bandied about is a long shot. A House bill would make the Consumer Financial Protection Bureau responsible for regulating them. This novel idea takes the power out of IRS’ hands, but chances of passage are slim. So a voluntary credential is the likely result. The Service would like to implement this idea in time for next year’s filing season.

Update Feb 28, 2014

The Service may lack the authority to regulate unenrolled preparers... But states still have the right to police them. Four states currently do so: Calif., Md., N.Y. and Ore. The last has a set of tough rules that have been in effect for years, requiring preparers who aren’t CPAs, lawyers or enrolled agents to register, pass a test and take classes. Calif. requires registration and continuing education for unenrolled preparers, who also must be bonded by an insurance agent or surety. The laws in Md. and N.Y. are much more recent, requiring only registration for 2014. Testing is around the corner in both states, and N.Y. will require continuing education. In the coming years, more states will jump on the regulation bandwagon.

Update Feb 14, 2014

IRS lacks the power to regulate unenrolled preparers, an Appeals Court says. It upholds a lower court’s ruling voiding the Service’s regulatory scheme for return preparers who aren’t attorneys, CPAs or enrolled agents. Under those rules, unenrolled preparers were required to register with IRS, pass a competency exam and take continuing education. In the Court’s view, the agency overstepped its bounds.

Only the preparer registration requirement remains intact now (Loving, D.C. Cir.). The Service is mulling a Supreme Court appeal, but the odds appear long that the High Court would take the case. The Appeals Court panel ruled unanimously against the regulations, and there is no split in the circuits that has to be resolved.

Update May 16, 2013

Fee amounts collected for scheduled registered tax return preparer test appointments canceled due to the court ordered injunction are being refunded. Additionally, fees collected from return preparers who tested on or after January 18, 2013, the date the test was enjoined, are also being refunded. No additional refund or reimbursement requests related to registered tax return preparer regulation are being provided or considered at this time. E-mail notifications will be provided to those receiving refunds to explain the process.

No action is necessary to receive the refund. A credit for the test fee will automatically be made to the account used to pay the fee. It is anticipated that all refunds will be processed by July 19, 2013.

Update March 28, 2013

We remain confident in our legal authority and remain committed to protecting taxpayers through implementing reasonable standards in this area. Our appeal of the original district court opinion is being actively pursued.

The IRS continues to have confidence in the scope of its authority to administer this program and is working with the Department of Justice to address all options, including a planned appeal.

Update Jan 22, 2013

On Friday, Jan. 18, 2013, the United States District Court for the District of Columbia enjoined the Internal Revenue Service from enforcing the regulatory requirements for registered tax return preparers. In accordance with this order, tax return preparers covered by this program are not required to complete competency testing or secure continuing education. The ruling does not affect the regulatory practice requirements for CPAs, attorneys, enrolled agents, enrolled retirement plan agents or enrolled actuaries.

Please continue to check this site for additional information as it becomes available.

On Friday, Feb. 1, the court modified its order to clarify that the order does not affect the requirement for all paid tax return preparers to obtain a preparer tax identification number (PTIN). Consistent with this modification, the IRS has reopened the online PTIN system.


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PTIN Fees are Challenged AGAIN.

The fee for getting or renewing preparer ID numbers is before a court again. A new lawsuit claims that IRS lacks the authority to impose the user fee and seeks refunds of amounts preparers paid. It also alleges that the fee is excessive because only 20% of the proceeds is used to pay the vendor to handle registration. The lawsuit faces an uphill battle. In 2012, an appeals court said the fee that IRS charged was valid. We’ll keep you updated on developments in this new case.

Bad news for folks buying insurance on an exchange

They won’t be able to use Form 1040-EZ, the one-page tax return for filers with less than $100,000 of income, who don’t itemize and don’t have any dependents. Instead, they will have to file the 1040-A or 1040, depending on their circumstances. Adults who purchase health coverage through the exchange will receive Form 1095-A, reporting the monthly health premiums and any advance credit payments. Taxpayers will then use Form 8962 to calculate their credit and enter any advance payments. The net amount will be transferred to a separate line on the back of the 1040-A or 1040.

Tax Center to Assist Unemployed Taxpayers

The “What Ifs” of an Economic Downturn The Internal Revenue Service recognizes that many people may be having difficult times financially. There can be a tax impact to events such as job loss, debt forgiveness or tapping a retirement fund. If your income decreased, you may be newly eligible for certain tax credits, such as the Earned Income Tax Credit

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IRS Increases Business Mileage Rates to 54.5 Cents Per Mile, up from 53.5 cents per mile in 2017.



Mileage Rate Changes

Purpose

Rates 01/01/18 through 12/31/18

Business

.54.5

Medical/Moving

.18

Charitable

.14


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