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For the first time, the IRS has taken concerted steps in regulating the tax preparation industry.  Up to now, virtually anyone can prepare a tax return for someone else and get paid for it.  While the majority of tax returns are prepared by knowledgeable professionals, there are others who do so although they are not properly qualified or knowledgeable.  Worse still, there are some unscrupulous individuals who take advantage of the need of taxpayers and submit their tax returns in exchange for a fee but take no responsibility for it whatsoever.  These ones submit often erroneous tax returns and promptly disappear after collecting their fees only to leave the taxpayer to answer questions from the IRS.

Starting next year, everyone who prepares a tax return on behalf of someone else and receives payment for it will have to register with the IRS.  This includes tax professionals like accountants, enrolled agents and tax attorneys.  Furthermore, those who prepare tax returns for others will be required to undergo an educational program that would include sitting for exams to ensure proficiency in what they do.  However, members of other professional bodies like accountants and attorneys do not have to participate in the continuous education program for tax professionals.

The IRS plan to regulate tax preparers includes a registration exercise for all tax preparers, where each one will be assigned a Preparer Tax Identification Number (PTIN) upon payment of a fee.  This registration process can be carried out online at the IRS website, www.irs.gov/taxpros.  All tax preparers must insert their PTINs in every tax return they submit starting from 2011.  As the enforcement of this rule is just around the corner, the IRS is urging every corporation and individual involved in tax preparation not to delay in getting registered.

By regulating the tax preparation industry, the IRS is getting serious in instilling greater professionalism among tax preparers and ensuring everyone is sufficiently knowledgeable about tax laws.  This is vital because according to the IRS, more than 60% of taxpayers use the services of a tax preparer in filing their tax returns.

On their part, consumers should insist that the tax preparers they engage to help with their tax returns have a PTIN and if not, they should find another one that has.

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