Congress can change the regulation of tax advisors. Why is it vital
As the Covid-19 pandemic set in, the federal government stepped forward to offer Americans unprecedented financial relief.
To access these funds, from stimulus checks to monthly child tax credits, most Americans had to file tax returns.
But presenting this paperwork could have put some individuals and families in a vulnerable position, according to industry groups.
The reason: Professional tax consultants are not subject to uniform standards.
According to the National Association of Enrolled Agents, more than half of all tax returns in 2020 were filled out by accountants. Almost two thirds of these preparers are not regulated or have to meet basic competence standards.
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Now some tax professionals are calling for a Congressional bill to change this in the upcoming reconciliation legislation.
“The pandemic has sparked a new wave of fraud and fraud, and Americans need to know they can trust the professionals they work with,” said Kathy Pickering, chief tax officer at H&R Block, during a webinar Tuesday.
The bill, called the Taxpayer Protection and Preparer Proficiency Act, was approved in June by Members Jimmy Panetta, D-Calif., And Tom Rice, RS.C.
If passed, it would give the US Treasury Department the power to regulate paid tax filers.
These tax professionals would be on the hook to prove their ability to prepare tax returns and process refunds. They would also have to meet further training requirements.
The bill would also give the IRS the power to revoke a person’s tax identification number or PTIN for fraud or incompetence.
The proposal would reintroduce a regulatory program for paid tax writers that the IRS introduced in 2011. This program ended after a lawsuit challenged the authority’s authority over the creators.
“The problem that existed 10 years ago has not gotten better,” said Roger Harris, president and COO of Padgett Business Services. If anything, it got worse as the tax law got more complicated and the IRS was forced to do more with no more resources, he added.
“The time was probably about 10 years ago,” said Harris. “Today it is certainly correct.”
To date, the latest version of the bill has only a few co-sponsors in house. However, groups in the tax industry that support the measure are optimistic.
Americans need to know that they can trust the professionals they work with.
Chief Tax Officer at H&R Block
“I think there is a window here,” said Jeff Trinca, legal advisor with the National Association of Enrolled Agents, of the reconciliation process.
One reason for this is the Joint Tax Committee’s estimate that the bill could help save money, he said.
“It’s very much tailored to something like reconciliation,” Trinca said.
Once the law is passed, it could be implemented quickly, Pickering said.
In the meantime, it is up to the taxpayer to do their own due diligence when working with a tax professional.
In addition to checking a creator’s website and social media profiles, taxpayers should also check their professional qualifications.
The website CPVerify.org can help verify a CPA designation. In addition, the State Board of Accountancy in which the person resides can confirm whether their CPA license is still active.
Alternatively, you can email the IRS to inquire about the status of a registered agent at firstname.lastname@example.org.
The IRS also provides a directory of professionals with PTIN numbers, which also includes information about any other credentials they may have.