FreedomTaxed Posted January 21, 2015 Report Share Posted January 21, 2015 https://www.congress.gov/bill/114th-congress/senate-bill/137 Something to watch out for. The bill aims to empower the IRS to directly regulate tax preparers, which was the missing element behind the Registered Tax Return Preparer (RTRP) program. The text of the bill (which I can't find again) simply adds "and tax preparers" to relevant sections of existing Title 26 code. The bill seems sluggish so I have my doubts about it passing. But bad ideas have a way of persisting and then making their way into legislation, so be prepared for the IRS taking control of our profession. Then it'll be more and more requirements each couple of years, and higher and higher fees to comply with those requirements. Quote Link to comment Share on other sites More sharing options...
Pacun Posted January 21, 2015 Report Share Posted January 21, 2015 (edited) "The bill seems sluggish so I have my doubts about it passing. But bad ideas have a way of persisting and then making their way into legislation, so be prepared for the IRS taking control of our profession. Then it'll be more and more requirements each couple of years, and higher and higher fees to comply with those requirements." I like the idea of regulation so I hope it passes. Edited January 21, 2015 by Pacun Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 21, 2015 Report Share Posted January 21, 2015 I passed my EA to bypass all this "stuff." Quote Link to comment Share on other sites More sharing options...
FreedomTaxed Posted January 21, 2015 Author Report Share Posted January 21, 2015 I like the idea of regulation so I hope it passes. Honestly, why? Regulation isn't the problem with erring and fraudulent tax preparers. The problem is that the IRS is nowhere near where it needs to be in providing consequences to tax preparers. For example, PTINs should be put on hold if there are too many erring returns submitted under them; the PTIN hold could then be noted in the efile rejection process, hence alerting the ERO. Regulation as indicated by the RTRP program is the IRS model for what's supposed to happen. So we already know how 'effective' it will be. Clue: Telling a fraudulent tax preparer to take 15 hours of b.s. online courses just so he can keep filing his frauds, changes nothing except to provide yet another financial opportunity for yet another parasite (the trainers and certifiers) who feeds on the industry and taxpayers. The fraudster preparer will just slap down the $200 and take the courses and keep filing EIC and Sch.C/E, as well as outright identity thefts. The erring preparer may have a better idea, but he was always supposed to be kicked in the butt by his clients and the IRS anyway. 2 Quote Link to comment Share on other sites More sharing options...
Pacun Posted January 21, 2015 Report Share Posted January 21, 2015 For your information the fraudulent tax preparer doesn't sign the return and doesn't need to register with anyone. So, that will not be stopped. What will be stop is the fact that there are many un-prepared preparers showing their clients that they know because the IRS issued them a PTIN. They frame that letter and clients think they know a lot when in reality they don't know anything. Your ideas are coming down the pipe, but the IRS has to start somewhere. So the starting point will be to force tax preparers to take exams and then other actions will come. I learn something from the classes and if I were not an EA, I wouldn't take them because I don't want to fork out 200 bucks or because I don't have time. 1 Quote Link to comment Share on other sites More sharing options...
Lee B Posted January 21, 2015 Report Share Posted January 21, 2015 The IRS doesn't have any real direct power over fraudulent preparers. If you read any of the news articles, all of the enforcement happens by the U S Attorney taking the preparers to Federal Court. Quote Link to comment Share on other sites More sharing options...
FreedomTaxed Posted January 21, 2015 Author Report Share Posted January 21, 2015 I don't mean to be pedantic, Pacun, but I can't agree that the starting point is to put a pointless educational load on the tax preparers. The market should be selecting these people out anyway, and those who aren't selected out, are then selected out by the IRS actually acting to enforce what the PTIN actually means. The PTIN implies that the IRS can disable it or revoke it, hence disable or revoke the tax preparer, hence suffice as enforcement. I guess what I'm trying to say is that if the IRS won't act against bad PTIN holders now, then why bother adding another layer of regulation that won't be enforced anyway? The IRS required a registration number, but almost nothing happens to you when you screw up. So the IRS wants to require an education base, but again, nothing will happen to you when you screw up. Prediction: Service for the clients will not improve; in fact, it's slightly likely to worsen, since added expenses will make preparers more desperate to make it up with "unreasonable" positions. 1 Quote Link to comment Share on other sites More sharing options...
Pacun Posted January 22, 2015 Report Share Posted January 22, 2015 I don't agree with your logic, but that's the reason we have this forum. Imaging for a second that IRS enforces this rule. ONLY Attorneys, CPAs and EAs can prepare taxes. So, we will have to pay extra for education credits but we will not need to be passing that cost to the clients because we will have extra clients. Prices will stay the same. If you don't agree with me, check how much HRB charges. 90% of the returns filed by HRB are not prepared by EA, Attorneys or CPAs and yet they charge more than why I charge as an EA and my office is only 2 blocks from theirs. With a rule like above, the public will be educated enough to ask for certifications. Currently the public knows that not such regulation exist so they go to the preparer that is suggested by the hair stylist. Let me talk about your comment about "the market should be selecting these people out anyway". That will be true if every single return is checked by the IRS. Let's say that I prepare 100 returns and 80% have big and little mistakes. I am lucky and only 2 returns are audited. I will loose two clients but I will stay in business because I keep 98 clients and more with my marketing strategy. Imaging that instead of preparing 100 returns, I sell 100 tomatoes. 80% of my tomatoes have big and little deficiencies. I will be out of business in no time. So the market will drive me out if I sell tomatoes but it will not drive me out if I prepare returns. To add to the IRS pain, tax payers are always looking for the guys that will get them a big refund. I have a lot of problem with that because in my area, I have about 5 preparers that prepare rotten returns and guess what, they don't need marketing and their business is always full of clients. When do you think the market will drive them out? Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 22, 2015 Report Share Posted January 22, 2015 I don't agree with your logic, but that's the reason we have this forum. Imaging for a second that IRS enforces this rule. ONLY Attorneys, CPAs and EAs can prepare taxes. So, we will have to pay extra for education credits but we will not need to be passing that cost to the clients because we will have extra clients. Prices will stay the same. If you don't agree with me, check how much HRB charges. 90% of the returns filed by HRB are not prepared by EA, Attorneys or CPAs and yet they charge more than why I charge as an EA and my office is only 2 blocks from theirs. With a rule like above, the public will be educated enough to ask for certifications. Currently the public knows that not such regulation exist so they go to the preparer that is suggested by the hair stylist. Let me talk about your comment about "the market should be selecting these people out anyway". That will be true if every single return is checked by the IRS. Let's say that I prepare 100 returns and 80% have big and little mistakes. I am lucky and only 2 returns are audited. I will loose two clients but I will stay in business because I keep 98 clients and more with my marketing strategy. Imaging that instead of preparing 100 returns, I sell 100 tomatoes. 80% of my tomatoes have big and little deficiencies. I will be out of business in no time. So the market will drive me out if I sell tomatoes but it will not drive me out if I prepare returns. To add to the IRS pain, tax payers are always looking for the guys that will get them a big refund. I have a lot of problem with that because in my area, I have about 5 preparers that prepare rotten returns and guess what, they don't need marketing and their business is always full of clients. When do you think the market will drive them out? I disagree with you on all counts. Reality will not support your ideas. Quote Link to comment Share on other sites More sharing options...
FreedomTaxed Posted January 23, 2015 Author Report Share Posted January 23, 2015 (edited) To add to the IRS pain, tax payers are always looking for the guys that will get them a big refund. I have a lot of problem with that because in my area, I have about 5 preparers that prepare rotten returns and guess what, they don't need marketing and their business is always full of clients. When do you think the market will drive them out? Well, the market has to be fully informed. Full information is delivered by IRS enforcement action. We're back to the IRS simply not doing its job. 90% of the tax returns that are filed in the USA, are filed electronically (by tax preparers running various programs, and by individuals running various programs). There's no reason that computers can't check ALL of these returns, and in fact all are checked to various degrees. The e-file rejection process proves that. The IRS receives 11 billion dollars to process about 230 million tax returns. That's $50 per return. Obviously such a system can't run on much Human interaction; that's far too little money per. But it's plenty of money to sift through about 200 million of those returns using algorithms. So I'd bet that if the IRS was forced to open up bidding on outsourcing the auditing arm, we'd see some efficiency show up... driven by fairly stiff fines on taxpayers and preparers that pay off the contractor. So we'd have the proper socio-economic motivation: Cheat on your taxes, or cheat on taxes for pay, and some profit-driven contractor will have you paying for his kids' braces... so you'd learn not to cheat on taxes again. Addendum: On that note, I agree about the letters the IRS is sending out about preparers which have a "high percentage of traits" for errors on the Schedule C. And the IRS needs to stop threatening and start issuing those $1000 and $5000 fines. Edited January 23, 2015 by FreedomTaxed Quote Link to comment Share on other sites More sharing options...
mcb39 Posted January 23, 2015 Report Share Posted January 23, 2015 I feel that I have a responsibility to myself as well as my clients to acquire as much knowledge as I can. Even after the fact, I am not sorry that I took the RTRP test. I have voluntarily attended tax classes and seminars for many years now; not because I enjoy them or can afford them, but because I feel that if I walk away with one new piece of knowledge; that is something I didn't know before. This year I walked away with several pieces of knowledge and the fact that I had taken the RTRP qualified me for the AFSP; and I know that many of you will say FWIW. Well, it is worth a lot to me because I know that I am doing what I can to make my business more productive and worthy. I am not responsible for unethical preparers, but I am responsible for ME and have an obligation to the clients who put their trust in me. 3 Quote Link to comment Share on other sites More sharing options...
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