Is the person preparing your tax returns qualified to do so?
With 60% of tax return preparers operating without any oversight or education requirement, the Internal Revenue Service wants to identify qualified preparers. But a district court struck down IRS regulations creating the Registered Tax Return Preparer (RTRP) designation in 2013, so now the IRS has created a similar—but voluntary—program for the 2015 filing season.
This is a big caveat emptor for taxpayers.
I anticipate that IRS will use the new voluntary education and database to look deeper into returns prepared by those unenrolled preparers who do not complete the voluntary education. The IRS will also post the database so taxpayers can see if an unenrolled preparer has participated in the voluntary education program.
Who Are Unenrolled Preparers?
Anyone can legally prepare your tax return and charge you for it. But that doesn’t mean they know what they’re doing.
Attorneys, Certified Public Accountants, enrolled agents, enrolled retirement plan agents, and enrolled actuaries registered with the IRS are exempt from the new voluntary program. The IRS assumes they’re qualified to prepare tax returns, and you can likely make the same assumption.
Preparers who completed the RTRP requirements don’t have to take the voluntary course to be enrolled in the IRS database. Others will take 18 hours of continuing education each year—10 hours on federal tax law topics, two hours on ethics, and a six-hour tax filing season refresher course.
While this voluntary education program has its critics, I’d recommend you make sure your tax preparer is enrolled.
Why Should Your Tax Preparer Be Enrolled?
Two reasons to not use an unenrolled preparer:
- You’re more likely to see errors.
- You’re more likely to see an audit.
Will the IRS really use the threat of audits to incentivize (or coerce) preparers into taking the voluntary education course? Or will the IRS simply make an actuarial assumption that they are more likely to find errors and violations in returns from unenrolled preparers?
Either way, you’re better off using an enrolled preparer.
More than 62,000 preparers fulfilled the RTRP requirements before the program was discontinued. Many more will take the voluntary education course. You shouldn’t have any trouble finding one.
Does LifeAuditors Prepare Tax Returns?
No, we don’t.
The only reason I wrote this post is to inform people—whether they’re clients, or not—about their best options as taxpayers. Unbiased advice is what Life Auditors is all about.
As the founder of LifeAuditors, I have more than 40 years of experience delivering confidential, unclouded financial assessments. We sell no products, have no alliances with financial services firms, and manage no accounts. We can help you be more proactive in your personal finances, because we have no stake.
If you want to know more, visit us at LifeAuditors.com.