As you may know, there are no federal standards to regulate who is able to prepare tax returns; however, according to a new NPR report, the IRS is looking to change the rules. The federal agency is now taking steps to determine who will be able to prepare taxes for individuals and businesses.
IRS Wants to Regulate the Tax Preparation Industry
The tax preparation industry is huge and growing, but while some of the preparers are legitimate CPAs and attorneys, others are just neighbors who live down the street. Since about 60 percent of those filing taxes use paid preparers and many are not regulated. It’s for this reason that the IRS wants to crack down.
They do not want unqualified people – or those who are simply incompetent – to be able to get paid for a job not-so well done.
New Rules in Tax Preparation
Here are just a handful of new rules that will affect those who claim to be tax preparers:
- Registration: Tax preparers will have to register with the federal government and receive an ID number.
- Testing: Everyone except CPAs and lawyers will have to pass competency tests.
- Education: Tax preparers (except CPAs and lawyers) will have to take continuing education courses.
- Ethics rules: They will also be required to comply with ethics rules that currently don’t apply to them.
Since these new rules would affect about 1 million tax preparers, the IRS hopes that these adjustments would help ensure the integrity of the tax preparation process. All in all, the IRS wants tax filers to receive accurate and honest advice.
How to Know if You’re Being Scammed by a Tax Preparer
The IRS offers a couple of tips to know if you’re being scammed by a tax preparer:
- Look Out for the Promise of a Big Refund: Those tax preparers that guarantee big refunds could be making illegal adjustments to your return to get a piece of your pie.
- Halt if They Want a Percentage: If the tax preparer is looking for a percentage of your refund then the IRS warns that this may be a red flag for a scam.
According to the NPR report, the new rules will not go into effect for the coming tax season as it needs time to implement the ideas. But in the meantime, the IRS plans to operate undercover to keep an eye on the current tax preparers and see exactly how they’re running their businesses.
Do you think the tax preparation industry needs to be regulated?