The IRS has hit a road block in its attempt to ensure that anyone who prepares paid tax returns for others meets certain minimum qualifications. The US Court in the District of Columbia has blocked competency testing for registered tax preparers. The IRS can no longer register or require continuing professional education for registered tax preparers. However, this change does not affect the requirements for Certified Public Accountants, Enrolled Agents, attorneys or certain supervised preparers. It also doesn’t affect state laws.
The result is that more than 300,000 tax preparers who were expecting to have to pass a test and take continuing professional education this year no longer have this requirement. However, this does not mean that paid preparers or individuals will receive lax treatment if their returns are wrong or fraudulent.
In addition to passing multiple section tests on tax law, CPAs and EAs are required to take accredited continuing professional education courses every year to keep up on current tax law. CPAs are required to take an average of 40 credit hours per year on a range of topics including tax, including four hours on ethics every two years. Enrolled Agents are required to take an average of 24 credit hours per year in tax, including two hours of ethics minimum every year. Registered return preparers would have had to take 15 credit hours per year in tax before the DC court ruling relieving them of this requirement.
The IRS’ purpose for registering non-licensed tax return preparers was to close the tax gap and reduce costly errors. The tax gap is the amount that the IRS estimates to be uncollected every year due to errors, enforcement failures, and fraudulent returns. Most recent IRS data shows the tax gap to be approximately $385 billion per year.
Financial Solution Advisors, PL has a professional tax staff made up of CPAs and EAs who have passed rigorous examination in tax law and continue to complete continuing professional education every year. We understand that many people don’t know the difference between licensed or enrolled preparers and registered preparers. We also understand that there are a lot of “do-it-yourselfers” out there who use various types of tax software to prepare their own returns. There’s nothing wrong with that. However we do offer a free, no obligation 1040 review if you are curious about what a firm of licensed professionals can do with your tax return. It’s our way of earning your future business.
If you are interested, please don’t hesitate to contact us and set up an appointment with one of our tax professionals.