Congress Introduces Tax-Preparer Regulation Legislation
Article Highlights
- PTIN Requirements
- CPAs, EAs, and Attorneys
- State Regulations
- American Families Plan
- Taxpayer Protection and Preparer Proficiency Act
While some states require paid preparers to register and pay a fee, only California and Oregon have comprehensive programs that include annual registration and verified continuing-education requirements. In addition, the IRS has a voluntary program that includes annual continuing-education requirements.
Thus, anyone—except in California and Oregon—who is not a CPA, EA, or attorney can declare themselves to be a tax preparer without needing any tax education.
The IRS has previously attempted, without Congressional authority, to regulate the tax-preparer profession, including registration, testing, and continuing education. But, as the result of a lawsuit (Loving v. IRS) filed by a group of unregulated tax preparers, a federal judge invalidated the program in 2013, ruling that the IRS lacked the statutory authority to regulate preparers.
The Biden administration’s American Families Plan calls for Congress to pass bipartisan legislation that will give the IRS the statutory authority to regulate the tax-preparer profession. Currently, tax returns prepared by certain types of preparers have high error rates. These preparers charge taxpayers large fees while exposing them to costly audits by claiming deductions and credits to which taxpayers are not entitled.
Reps. Jimmy Panetta, D-California, and Tom Rice, R-South Carolina, have introduced the bipartisan Taxpayer Protection and Preparer Proficiency Act, which would permit the IRS to regulate paid tax preparers and mandate minimum competency standards.
According to Rep. Panetta, “Mistakes by incompetent tax preparers have led to many taxpayers getting audited or penalized through no fault of their own.” He further commented, “My bipartisan legislation will help prevent such predicaments by allowing the IRS to regulate paid tax preparers and ensure that they are meeting minimum competency standards. Anybody who pays for their taxes to be prepared deserves to know that their tax preparers are professional, proficient, and principled and, if not, will be held accountable by the IRS.”
Rep. Rice also commented, “The Taxpayer Protection and Preparer Proficiency Act will reduce error rates, lower risks for taxpayers, and help put a stop to the use of unqualified tax preparers. Since the federal government dictates our obligation to file taxes, we ought to allow the IRS to ensure that those who taxpayers turn to for assistance are well qualified.”
If you have been using an untrained and unregulated tax preparer and have concerns about whether your return has been prepared correctly, please call this office for a review. Uneducated preparers frequently overlook legitimate deductions and credits, especially with all of the new benefits available during the COVID pandemic.
Want tax & accounting tips and insights?
Sign up for our newsletter.
“Bernard and his team at BR tax group are top notch. This is my first year using them after switching from a different local CPA and I didn't realize how much tax info I've been missing. His communication is great. The additional information he provides to maximize tax savings is something I didn't get from my previous CPA. Thanks Bernard”
Frequently Asked Questions
-
You can prepare your taxes yourself, especially if your business is simple.
But once you have contractors, employees, business loans, equipment purchases, mileage, mixed expenses, or growing revenue, things get more complex. At that point, tax preparation becomes a way to make sure your business is reported correctly, your deductions are handled properly, and your records can support what you file.
-
Send anything that shows what your business earned, spent, bought, paid, borrowed, or changed during the year.
That usually means your income records, bank statements, credit card statements, payroll reports, contractor payments, loan documents, mileage records, and prior-year tax return. Also tell me about anything unusual, such as buying a vehicle, hiring someone, opening a new location, or taking out a business loan.
-
Messy books can slow things down. If expenses are in the wrong categories, transactions are missing, or personal and business spending are mixed together, your tax return may not show the right profit. We may need to clean things up before filing, so your return is accurate and easier to support.
-
Possibly, if it was truly for your business and you have proof.
Still, it is much better to avoid this when you can. A separate business bank account and business credit card make everything cleaner. They save time, reduce confusion, and make your records much easier to defend if anyone ever asks questions.
-
Most small business owners can deduct ordinary business expenses like software, advertising, supplies, insurance, rent, payroll, contractor payments, professional fees, travel, and some vehicle costs.
The question I usually ask is simple. Was this expense clearly for the business? If yes, we can look at how it should be handled. Personal expenses should stay personal.
Our Offices
Georgetown
Austin - Arboretum
Austin Downtown
Let's Get Started
Our services are designed specifically for business start-ups, entrepreneurs and small businesses of all sizes. Let’s start the conversation.
Site managed by http://www.webstrategyboost.com/