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The Facts about the Newly Instated Tax Preparation Certification

By Jon Harwokey

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Published: 29Apr2010
Word count: 512
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Over eighty percent of households in the United States are now using a paid professional or some sort of software to assist with tax preparation each and every year. The IRS now wants to gain a better understanding of exactly who these people are and just how qualified are they to help John Q. Taxpayer file his return by the letter of the tax law.

As it stands now, anybody, with or without a tax preparation certification, can charge a fee for preparing someone else's tax return; and while some of these individuals are licensed by their respective states or certified by the IRS, there is no mandate in place for any paid tax preparer to meet even minimum government or professional certification standards. So basically, anyone claiming to have even a little bit better understanding of tax law and filing practices can demand a fee for filing my tax return.

So after a lengthy six month study, the IRS, in their infinite wisdom, has launched an aggressive effort to reach these free-wheeling tax preparers with higher levels of education and enforcement. The hope is that higher standards for tax preparation will ultimately provide greater protection for the droves of taxpaying citizens who seek out some form of support in navigating the undeniable complexities that tax season brings.

So let's take a look at some for the changes proposed by the Internal Revenue Service. The first requirement comes in the form of the Preparer Tax Identification number, or PTIN. The measure requires ALL paid tax preparers to register with the IRS and get a valid PTIN, which essentially serves as tax preparation certification from the IRS. The process will include a compliance check to ensure that all individuals charging fees to file others people's taxes have, in fact, paid up on their own taxes, a veritable no-brainer from my perspective.

Secondly, the IRS will begin requiring all paid tax preparers to complete competency tests before they are unleashed upon the good taxpaying citizens. This measure will not be enforced on attorneys, CPAs, and other professionals so long as they are in good standing with their various oversight bodies. The initial competency test will not be the end of things, however. Tax preparation certification will also come with a requirement to pursue increased levels of ongoing professional education. This measure also excludes practicing professionals (attorneys, CPAs, etc.) who already adhere to industry continuing education requirements.

Lastly, the IRS is set to extend the ethical rules outlined by the Treasury Department to include ALL paid tax preparers. In previous tax seasons, these rules only applied to attorneys, CPSs, and other IRS-recognized agents; but with this extension, the IRS will be able to discipline any paid tax preparer for 'unethical or disreputable conduct.'

Despite these efforts by the IRS to standardize paid tax preparation, it is still your task to seek out a reputable tax preparer. At the end of the day, you as the taxpayer are still legally responsible for whatever is stated on your return, no matter who put it there.

Jon Harwokey is a software developer for a small tech firm. He has had his IRS certification to prepare taxes for several years and recently used CPA Exam Review to update his certification.

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