by Brian Mahany
The IRS has identified 10,000 tax return preparers who they say make too many errors. Errors that ultimately cost their clients money. The IRS plans to visit approximately 2,500 of those preparers over the next several months.
Many people use professional tax preparers for their returns. Wealthier individuals often use CPAs while folks with relatively simple returns prepare their own return or use a local tax preparation service. Most services do a great job and several chains, like H.R. Block, have a formal training program. Unfortunately, anyone can call themselves a “tax preparer” and prepare returns.
Over the last two years the IRS has begun to regulate the industry. There have been repeated calls for minimum competency standards and annual training on tax law changes. Although requiring training will probably increase the cost for some returns, certified public accountants and many larger preparer services already have excellent training programs in place.
Right now, to become a tax preparer one simply needs to register with the IRS and pay $64.25.
Insuring that paid preparers are competent is important. When a preparer makes an error, the taxpayer is left footing the bill. Some preparers will offer to pay penalties but many do not. Either way, the tax payer is left with an expensive audit to defend, the inconvenience and hassle of providing records and often, an unwelcome bill for additional tax, interest and penalties.
While I always recommend using a CPA or a full time tax accounting firm, I also recognize that there are some great preparers out there who are not accountants. Before you try to save $10 and use the guy who does returns in his kitchen, however, ask what type of training he has and how often he takes refresher courses. (Remember, Congress changes the tax code every year.) Better yet, ask if he or she received one of the 10,000 letters from the IRS. If so, consider a different preparer.
Mahany & Ertl is a full service law firm helping people and businesses with a wide variety of tax problems. We can help with audit defense, tax compliance, collection representation and criminal tax defense. If a paid preparer has made mistakes or provided poor advice, we may be able o help eliminate penalties and possibly recover damages from the preparer. For more information, contact Brian Mahany (414) 704-6731 (direct dial) or through the website, https://www.mahanyertl.com