Be sure to visit The Income Tax School www.theincometaxschool.com in the Exhibit Hall at the IRS Nationwide Tax Forums (exhibiting at all Tax Forums except NYC). Complete information about the 2009 Tax Froums is available at the following link: http://www.taxforuminfo.com/
The Obama Tax Plan "...could significantly reduce the workload of some tax accountants and push others out of business altigether..." according to an article in the September 22 issue of Accounting Today (see full article at link below). In a previous post in Tax Industry Talk, an article was referenced regarding McCain's desire to enable taxpayers to eliminate the cost of tax preparers.
Will the Congress soon pass legislation to require the IRS to regulate unenrolled tax preparers? According to an Accounting Today article (link below) the recent GAO "study results boost preparer registration movement," and the Oregon model is viewed as the most likely to be adopted by IRS.
Do you think regulation of tax preparers is likely?
Tax simplification has been a mainstay of McCain's stump speeches since April, when he backed creation of an optional second tax system based on a two-rate structure. "We will simplify the tax code so people can understand it and do their tax returns themselves," McCain said in a September speech.
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.
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.
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.
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.
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?