Tax Return Preparer Requirements

2021-05-13 14:44:24
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Taxpayers are obligated to file their tax returns in particular time and have accurate reports. For the purpose of ensuring that they file the right returns accurately, they pay professional and experienced people in filling returns to assist them. The internal revenue services have set rules and regulations that one must comply with if they file more than 11 tax files since 2012 (Kass-Shraibman, 2011, p.7). IRS set out the minimum requirements that one has to meet to become a tax preparer. Therefore, if one has a new firm that indents to file tax returns for clients, they must meet the minimum requirements.

A tax preparer who is filing more than the minimum number of tax returns is required to e-file the returns. For one to e-file should obtain an Electronic Filing Identification Number (EFIN). A preparer who are supposed to use e-file in filing returns is expected to inform the clients. The number is obtained by applying for it online from internal revenues services website. Tax preparers must have Preparer Tax Identification Number (PTIN) (Delore, 2010). For one to obtain PTIN, they must have the minimum qualification set and accepted by the IRS. The preparers must have an age of 18 years and above with the required minimum education level and competence required as per the IRS rules. In the testing of the ability of one to file tax, one is given a suitability exam that they must pass (Delore, 2010). The suitability test is done before obtaining PTIN. The character of the person and past honesty is evaluated to ensure the right people are given the rights to become preparers. The preparers are required to obtain renewals of PTIN annually to continue preparing tax returns for clients. The annual renewal fee that a qualified preparer must pay is $ 50, and it should be done by 31 December each year. In order for the PTIN renewal to take place, the preparers are evaluated in their past behavior to ensure that they are competent to continue filing tax for clients. Initially, the preparers were required to have a continuous education but in 2015 it was passed that it is not mandatory, but one can voluntary attend training programs offered. A preparer is required to verify their PTIN with Tax Act. In case, a client does not want to have their returns filed online, and they are supposed to provide the preparer with a signed statement attesting the same.

The obtaining of the identification for the tax preparers aims at increasing accountability for the tax preparers. It eliminates the preparers who are not qualified and who were previously not regulated. If there are problems in filed returns, preparers are linked with them, and the client is not held responsible. The identification enables the verification of other requirements for a tax preparer such as testing and suitability to practice (Tolan, 2012, p. 486). It is during the process of obtaining the PTIN that one has to fulfill the other minimum requirements. The Internal Revenue Services is enabled to control the actions of all the registered tax preparers by the mandatory annual renewal fee. The tax preparers have to comply with the current regulations set since they would require the renewal of their identification to continue practicing. If a tax preparer fails to meet the set regulations, they would have their identifications not renewed. In some cases, offenders can pay monetary penalties. The fees paid help in the discouraging renewing of the PTIN for preparers who are no longer interested. PTIN IRS identifies incompetent tax preparers since their work has their identification. Over the period IRS to train the tax preparers because of the competence required and the consequences they may face if they are not well informed. The Identification number acts as a factor forcing the preparers to meet all the set requirements (Tolan, 2012, p. 487). The annual fee helps in reducing the work of the IRS in processing applications since those who are not interested do not send their applications. The use of e-file for tax preparers filling more than 11 files helps in reducing the manual work that IRS would undergo. If a tax preparers client does not want e-filing of their returns statement, contributes to reducing the loopholes preparers would use to file tax manually. It reduces the liability of the tax preparer in case taxpayer files inaccurate returns.

For one to have PTIN, they have to apply for it in the Internal Revenues Services. The IRS requires preparers to create an IRS e-services account first before they are given the authority to file tax for clients. In the creation of the account, one is supposed to provide personal details such as legal names, the social security number, phone number, and place of birth and email address. The income and creation of a username are also required. The person gets a confirmation after submitting requirements after around 28 days (Treasury Department, 2014, p. 6). The application is then submitted for the EFIN. Before approval, one does and suitability test that one has to pass. Request for EFIN may take up to 45 days. Once one receives EFIN, they apply for PTIN.

References

Delore, T. (2010). Tax preparers get ready for new ID requirement. (cover story). Business Journal (Central New York), 24(50), 1-10.

Kass-Shraibman, F. (2011). Some Rules Related to the New IRS E-File Mandates. Journal Of The CPA Practitioner, 3(1), 7.

Tolan, P. (2012). Its About Time: Registration and Regulation Will Boost Competence and Accountability of Paid Tax Preparers. Virginia Tax Review,31, 471-576.

Treasury Department,. (2014). Regulations Governing Practice before the Internal Revenue Service (pp. 1-44).

 

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