IRS Commissioner Introduces the Return Preparer Initiative

Nov 01, 2010   

Speaking before the American Institute of Certified Public Accountants (AICPA) on October 26, 2010, Commissioner Douglas H. Schulman announced the Internal Revenue Services (IRS) goals of “a sound, fair and efficient tax administration” and “improved compliance.” In implementing these goals, the IRS has adopted the “Return Preparer Initiative”, which Commissioner Schulman described as part of “an evolutionary change of getting smarter and working smarter.”

The purpose of the Initiative is to help taxpayers file accurate returns from the start. This avoids the difficult and time-consuming issues that arise when the IRS discovers inaccuracies on the taxpayers return. The Initiative targets the professional return preparer community to achieve these results. After pointing out that eight of every ten taxpayers use professional tax preparers when filing returns, Commissioner Schulman attributed inaccuracies in tax returns to the large amount of return preparers that are not subject to any professional oversight.

To ensure that return preparers are competent, the Initiative launched an online Preparer Tax Identification Number (PTIN) application, requiring all return preparers to be registered with the IRS. The IRS plans to use these applications to build a publicly accessible database that consumers can use to ensure their return preparers are qualified.

In addition to the registration requirement, the Initiative also seeks to impose testing and continuing education requirements for return preparers. As the Internal Revenue Code continues to become more complex, these requirements will help ensure that return preparers are aware of changes in the Code and are able to reflect these changes in the returns they prepare.

For the upcoming tax year, the online PTIN application appears to be the only requirement for return preparers. As the IRS has neither determined the start date for the testing requirement nor the effective date for continuing education, Commissioner Schulman stated the IRS intended to waive these requirements during the first year of implementation.

If you have any questions regarding the Return Preparer Initiative or any other tax provision, please contact Fuerst Ittleman, PL at contact@fidjlaw.com.