IRS Launches Tax Return Preparer Review

 

The IRS is considering registering or licensing paid tax preparers such as H&R Block Inc. and Jackson Hewitt Tax Service Inc. as part of a broad review of the way Americans file tax returns, Commissioner Doug Shulman says.

 

While the IRS will consider the role of tax-software providers, human preparers are the focus of the IRS effort to craft stricter standards, IRS Commissioner Doug Shulman told reporters, “There are many, many excellent preparers,” he says. “There are also some unscrupulous preparers out there.”

 

In addition to enrolled agents, lawyers and accountants licensed to represent taxpayers before the IRS, the recommendations would cover a growing category of unlicensed tax preparers and tax-software providers, according to an IRS news release.

 

The IRS doesn’t even know how many individuals or companies prepare returns for taxpayers, Shulman acknowledges.

 

In a September 2008 study, auditors from the Treasury Inspector General for Tax Administration posed as taxpayers at 28 tax-preparation firms, both chain and self-employed. They reported that 17 of the 28 returns had errors, with six returns containing omissions or misstatements the IG said were “willful or reckless.”

 

Shulman says the IRS will hold a series of public meetings to gather input on the new regulations. He says while he has reached no conclusions about what is appropriate, possible elements range from a standard of ethical conduct for preparers, to education and training requirements, to mandatory registration or licensing of all return preparers.

“For me, everything is on the table,” he says.

 

More than 350 preparers were convicted of fraud over the past three years, according to IRS records.