Tax Industry Talk

2008 IRS Nationwide Tax Forums Starting Soon

The first of six IRS Tax Forums will be held in Atlanta July 1-3, 2008. Other events will be held in Chicago, Orlando, Las Vegas, New York and San Diego.

These events will offer the latest word on new tax law and e-file as well as compliance and ethics issues. Attendees will also have the opportunity to interact with IRS executives, network with peers and receive Continuing Professional Education (CPE) credits.

Nationwide, more than 15,000 tax professionals participated in the tax forums last year and survey responses showed that 98 percent were satisfied with the forums. Attendees also said the forums enabled them to meet their clients’ needs more professionally and with more technical expertise.

On-line registration, other forum dates, and more details are available at:IRS TAx Forum Website

News From the Maryland Association of CPAs Re: Maryland Individual Tax Preparers Act

New regulation for Maryland tax preparers?

Maryland's 2008 legislative session rolls along, and it looks like one issue on the MACPA's radar screen -- the Maryland Individual Tax Preparers Act -- might be moving toward passage.

That bill would create a "State Board of Individual Tax Preparers" in the Department of Labor, Licensing and Regulation to oversee the efforts of all state tax preparers. The bill is meant to protect the state's taxpayers.

The MACPA supports the bill in general, provided some amendments are factored in. Since CPAs are already regulated by the State Board of Public Accountancy, for instance, they should be exempt from the requirements put forth in the bill -- which makes sense. Our sister blog, Legislative Insider, outlines the MACPA's position on the bill in detail.

So does a recent Daily Record article by Andy Rosen. Here's what Rosen wrote:

At first, the bill met with concern from tax preparers who are already licensed, such as CPAs, federally regulated enrolled agents and tax attorneys.

CPAs, for instance, are regulated by the State Board of Public Accountancy.

"Our issue is, we don’t want to have CPAs in a position of being double regulated," said J. Thomas Hood III, executive director and CEO of the Maryland Association of CPAs. He said his organization could support the proposal after an exemption was carved out for CPAs, and their employees.

The association pushed for other amendments, including one that would require public education about the bill. Those amendments are contained in the Senate proposal. Hood added that he thinks the registry should cover people who prepare business as well as individual returns.

What do you think about the bill?

Maryland's 2008 legislative session rolls along, and it looks like one issue on the MACPA's radar screen -- the Maryland Individual Tax Preparers Act -- might be moving toward passage.

That bill would create a "State Board of Individual Tax Preparers" in the Department of Labor, Licensing and Regulation to oversee the efforts of all state tax preparers. The bill is meant to protect the state's taxpayers.

The MACPA supports the bill in general, provided some amendments are factored in. Since CPAs are already regulated by the State Board of Public Accountancy, for instance, they should be exempt from the requirements put forth in the bill -- which makes sense. Our sister blog, Legislative Insider, outlines the MACPA's position on the bill in detail.

So does a recent Daily Record article by Andy Rosen. Here's what Rosen wrote:

At first, the bill met with concern from tax preparers who are already licensed, such as CPAs, federally regulated enrolled agents and tax attorneys.

CPAs, for instance, are regulated by the State Board of Public Accountancy.

"Our issue is, we don’t want to have CPAs in a position of being double regulated," said J. Thomas Hood III, executive director and CEO of the Maryland Association of CPAs. He said his organization could support the proposal after an exemption was carved out for CPAs, and their employees.

The association pushed for other amendments, including one that would require public education about the bill. Those amendments are contained in the Senate proposal. Hood added that he thinks the registry should cover people who prepare business as well as individual returns.

What do you think about the bill?

Does the Ability to Download W-2s Give National Tax Firms an Unfair Competitive Advantage Over Independents?

Here is the question posed by independent tax preparer, Tom Leesburg of Florida:

Do you address downloading W-2's.  Do you address how the independents can compete with Jackson Hewitt downloading ADP W-2s and we cannot?  I use [tax software], their payroll company is ADP and they do not even know about downloading ADP W-2's. I have been asking for this for four years and I have found sites on my own, but the problem is the large companies unfairly competing by downloading or using the last paystub to file the return (claiming that they are downloading). Even turbotax is offering this service, what the average preparer is not aware of is that the ability to file from the last paystub is driving people to websites like TurboTax.

What are your thoughts?

Tax Preparer Regulation Reintroduced to Congress

What are the implications for Tax Professionals?

New Taxpayer Bill of Rights Introduced (Source: NATP)

On April 7, Congressman Becerra introduced his Taxpayer Bill of Rights Act H.R. 5716 in the House. This bill is the latest development in Congressional efforts to license tax return preparers.  It is significant in that it also represents the first time under this administration that the House of Representatives has introduced licensure legislation.  There is now a bill in both the House and the Senate.  You should know that NATP has been working with Congressman Becerra and his staff since last year, giving comments on the provisions proposed in this bill and representing the interests of all tax professionals whether licensed or unlicensed.  While we did not get consideration for all of our observations, we are gratified that a great many of our comments and concerns were addressed.  This bill allows the Treasury and the IRS wide latitude in its implementation. 

The Taxpayer Bill of Rights Act of 2008 contains a variety of provisions aimed at improving services for taxpayers, particularly those with low or moderate incomes. In addition to licensing, it would protect taxpayers from lenders of refund anticipation loans (RALs) who act unscrupulously.  The bill would also clarify taxpayer rights and obligations, establish a grant program for free tax preparation and representation clinics, and help provide access to financial institutions for low-income taxpayers without a bank account. 

We will continue to monitor this bill as well as S. 1219 in the Senate and report to you on their progress.  We will also continue to comment as we meet with Congressional leaders on a regular basis. 

H. R. 5716, The Taxpayer Bill of Rights Act, as well as the House of Representative’s prepared Fact Sheet summarizing the key provisions of the bill are available at the NATP website.

IRS Enhanced Standards of Conduct for Tax Return Preparers--What will this mean for tax preparers?

On December 31, 2007, IRS announced that it plans to overhaul rules regarding tax preparer penalties and conduct. The IRS news release included the following statements:

“The plan to take a fresh look at the preparer penalty regulations will be a top priority for us in 2008,” said IRS Chief Counsel Don Korb. “We look forward to receiving comments from all interested parties on their recommendations for the final regulations. Our goal is to complete our work on the overhaul of these rules by the end of 2008,” he said.

For undisclosed positions on a tax return, the new law replaced the realistic possibility standard with a requirement that there be a reasonable belief that the tax treatment of the position would more likely than not be sustained on its merits. In cases in which the taxpayer discloses the position on the tax return, the notice implements the new law that states there must be a reasonable basis for the tax treatment of the position taken on the tax return.

Will these new rules place undue burden on tax preparers to interpret the law and take more conservative positions?   Or will they help to prevent tax preparers from encouraging their clients to take questionable tax positions?  Should tax preparers be put in the position of making such judgements?

Will IRS Succeed in Killing the RAL?--Impact of New IRS Privacy Rule Proposal

On January 2nd, the Treasury Department and the IRS issued an Advance Notice of Proposed Rulemaking pertaining to stricter taxpayer privacy rules (IRS Code Section 7216). The proposed rules would prohibit the marketing of RALs and other products to taxpayers based on information from the taxpayer’s return, even if the taxpayer grants permission. If adopted, the new rules could effectively prevent tax preparers from providing RALs and similar products such as RACs and Audit Insurance to taxpayers.

In its proposal, the IRS said: "The Treasury Department and the IRS are concerned that RALs and certain other products may provide tax preparers with a financial incentive to take improper tax return positions in order to inappropriately inflate refund claims." IRS also said, "A preparer who inappropriately inflates the amount of a refund is able, directly or indirectly through arrangement with a RAL provider, to collect a higher fee.” IRS will accept comments on its proposed new rules through April 7, 2008.

The next day Jackson Hewitt’s stock price dropped by more than 23 percent and Block’s stock dropped by nearly 5%. Block subsequently issued statements indicating that they are not concerned and Jackson Hewitt issued a statement that it strongly believes that taxpayers should have the right to decide if they want to provide information to tax preparers and to purchase legitimate services and products.

Link to IRS News Release:
http://www.irs.gov/newsroom/article/0,,id=177075,00.html.

• What are the implications of this proposal for Tax Industry Participants?
• What ripple effects might occur for the tax industry, taxpayers and others if the RAL was suddenly killed by IRS?
• What alternatives to RALs might still be available to taxpayers?

National Taxpayer Advocate Report to Congress

Nina Olsen, National Taxpayer Advocate, in her 2007 Annual Report to Congress presented yesterday, 1/9/07, criticized Congress for making late-year tax law changes, such as the last minute passing of the AMT Patch which will result in many taxpayers' refunds being delayed, as well as problems for shrink-wrapped tax software providers (not to mention tax preparer software providers).  This was the Number 1. issue listed in the report.  A summary of Ms. Olsen's report can be viewed at the following link:

http://www.irs.gov/pub/irs-utl/arc_exec_summary_2007_final.pdf

AMT Patch Delay -- Implications for the Tax Industry

How will the delay in e-filing tax returns with certain credits and the resulting delay of refunds for those taxpayers impact our businesses this tax season, and how can we minimize the problem? 

Please join us in a discussion about how tax preparers and tax industry businesses can address the 2008 tax season ripple effects of the delay by Congress in passing the AMT Patch legislation.

How should tax preparers communicate the delay in e-filing of some returns and delayed refunds to their employees, prior clients and local media and what should they say?

How can early returns still be e-filed even if they would include a form that cannot be e-filed until February 11th.

Does this problem also present opportunities?

Links to IRS News about the AMT Patch & Implementation:

http://www.irs.gov/newsroom/article/0,,id=176948,00.html

http://www.irs.gov/newsroom/article/0,,id=176678,00.html