Some individuals with long tax preparer careers are concerned that the IRS is aiming to make members of their profession semi-agents for tax collection. That isn’t likely to become the burden many fear considering the number of people who will become registered tax return preparers, which the government relies upon for the public to comply with the tax system.

Nevertheless, the IRS is taking a clear position of stronger authority over return preparers. Circular 230 imposes due diligence requirements. But these standards are beneficial for taxpayers in addition to the IRS. Of course, the entire process does comprise more work for tax preparers. Even more imposing is that tax professionals must often explain to clients the reason for making penetrating inquiries.

As long as taxpayers are paying for tax preparation services, they should expect returns that capture the most legally beneficial results. The IRS claims this is more likely with the certification of tax preparers. Although theRTRP exam doesn’t assure mistake-free work by every tax practitioner, the process does render greater likelihood of consistency among preparers. This means that tax return professionals should seldom face competitors that determine different refunds for a particular taxpayer.

Whether the IRS will use its control over universal registration to enforce tax collection type measures upon tax preparers remains uncertain. But any such attempt by the IRS is unlikely to succeed. Having tax preparers snoop excessively into the accuracy of taxpayer figures will not yield greater tax collection. Rather, it will cause taxpayers to avoid the tax preparation industry and result in less accurate reporting.

That would damage tax collections for the IRS more than destroy tax preparer jobs. Consequently, few tax practitioners will experience IRS scrutiny for failing to act as tax collection agents. The IRS will experience undesirable backlash if it attempts to compel tax preparers to perform more than reasonable inquiry of taxpayers.

IRS tax preparer requirements are certainly expected to increase consistency with return accuracy. But a significant increase in tax collections for the IRS is unrealistic. Perhaps some tax preparers will locate a few tax cheaters with due diligence actions. Mostly, however, tax professionals can continue relying upon the representations of their clients by conducting inquiries falling far short of pre-audit.

As the IRS makes greater demands about substantiation of numbers on returns, tax preparers should respond with records of how clients conveyed information. The supporting documentation of a tax practitioner is best when it describes the date and manner that taxpayers presented claims on their returns.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

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