New Tax Preparer Requirements Have Drawbacks

The Internal Revenue Service proposals for registration, testing and continuing education of tax preparers has won praise from most stakeholders.

The rules, which will take several years to implement, will require all paid tax return preparers that must sign a federal tax return to register with the IRS and obtain a preparer tax identification number. Competency tests will be administered for all paid preparers other than attorneys, CPAs and enrolled agents. The rules also mandate ongoing continuing professional education and extend Circular 230’s ethics rules to all paid preparers.

“It will raise the credibility of the entire profession,” said Amy McAnarney, CPA, executive director of The Tax Institute at H&R Block. “The focus is on those that aren’t regulated today, and that’s the majority of tax preparers out there. We think it is a good thing for preparers, and the system itself.”
In her just-issued annual Report to Congress, National Taxpayer Advocate Nina Olson called the plan a “significant, far-reaching initiative.”

But she noted that one aspect of the plan might open the way for some to exploit and skirt the rules. The IRS plan announced this week would impose requirements on return preparers who sign tax returns but not on preparers who meet with taxpayers and prepare their returns so long as someone else signs them. To minimize the cost and burden, Olson said, an office may decide to employ one “signing” preparer who would be certified under the new rules, and an unlimited number of “nonsigning” preparers.

The nonsigning preparer would not have to register, pass an exam, or take continuing education courses, and the signing preparer would be unable to thoroughly review every return. In fact, Olson noted, the burden of the new rules themselves may cause more return preparation businesses to employ nonsigning preparers. “We are concerned that excluding nonsigning preparers could create an exception that swallows the rules,” she stated. She observed that not all nonsigning preparers need to be covered to protect taxpayers, and recommended that the IRS consider extending the new rules to apply to all unenrolled nonsigning preparers.

“The devil will be in the details. There will be time for these concerns to be addressed as they take the proposal and turn it into regulations,” said Roger Harris, chief executive of Padgett Business Systems. “But it’s a great first step.”

When the rules are fully implemented, the newly regulated preparer who undergoes the registration and ultimate testing process will have “a pretty strong credential,” Harris observed. “A person who is not an attorney, a CPA or an enrolled agent will have to decide which credential will ultimately work best for the preparer and his or her clients.”

Barry Melancon, president of the American Institute of CPAs, also expressed some apprehension about the new credential the rules will create. Although he agreed that the proposal will foster greater compliance with the Tax Code and more reliable service for taxpayers, he noted “concerns about the IRS plan to provide tax preparers who are not already CPAs, enrolled agents or attorneys with a certification based on limited qualifications. A new IRS examination process may cause confusion among taxpayers about the relative qualifications of tax return preparers.”

“It depends on how strict the tests are, how you promote the people that pass it, and how you position them in the marketplace,” said Harris. “Do you tell consumers the registered preparers are at the minimum level of competency, or do you say they’re as qualified as anyone else?

“There has to be a balance between testing for competency without being overly restrictive,” he added. “You want the test to be strong enough so the IRS can say it’s comfortable with the qualifications of those that pass it, but if the test is too difficult, it will negatively affect the industry’s need for tax preparers.”


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IRS Tax Problems -- Special Returns

Most people have employment income (W2) with only a few deductions. These are among the most simple and straightforward income tax filings to do. There are number of people who are self-employed or they have significant amounts of investments and are claiming both unusual income as well as significant deductions against their income. In some cases they IRS will agree with the teturn, while in other cases the IRS will reject the return and decide that you owe additional taxes. If you are not the tax care professional and do not understand all of the new tax laws that are generated every year then you probably will be in better hands if you use a tax relief firm and avoid avoid any problems or miscommunication with the IRS and your potential tax problems. Special returns for such areas as a large income in one-year, the estate returns, sales of investment property and other areas usually require the skills of a tax relief firm who has the resources to help you. These special returns if filed correctly will avoid future IRS tax problems and also avoid penalties and possibly interest that may be assessed for failing to file correctly.

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WAGE GARNISHMENT

Almost nothing is worse than having your wages garnished by an IRS Wage Levy. In the case of a Wage Garnishment, the taxpayer is directed to turn a significant percentage of his or her wages to the IRS. In the event that the IRS files a Wage Garnishment, the taxpayer's employer must intercept a percentage of each of his or her paychecks, and then forward that percentage to the IRS. Wage Garnishments remain in effect until the taxpayer's IRS back taxes are paid in full, or a formal release is negotiated with the IRS. The amount of money that the IRS can withhold is based on a variety of factors, such as whether or not the taxpayer is married, or the number of dependents the person in question has. Up to 90% of your salary can be withheld and sent to the IRS on every paycheck!
PowerTax Relief realizes that reductions in income can be disturbing and destructive to individuals and families. Shortly after garnished taxpayers get in touch with us, we start negotiations with the IRS for a release. In most cases we get wage garnishments lifted on our first contact with the IRS. If not, our tax relief experts will find out what the IRS requires to solve your tax problems and release the wage garnishment. We will work diligently on your behalf until your wages are released. We almost always get wage garnishments released before our client's next paycheck! You can count on PowerTax Relief for both Federal and State tax help.

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TAX SETTLEMENT & AGREEMENT

A tax settlement payment plan with the IRS is formally known as an Installment Agreement. It is possible that the IRS will accept monies for unpaid taxes over the course of up to five years. Sometimes after in-depth financial analysis, our income tax attorney may determine you do not meet the qualifications for an offer in compromise. If so, we consider the next best course of action to resolve your IRS debt problems.
Those individuals who fail to qualify for an IRS Offer in Compromise might be able to receive tax relief through Installment Agreements. If a negotiation with the IRS concludes that one's liquid assets are not sufficient to pay off one's debt, the IRS may opt for an installment approach, instead of a more severe IRS tax garnishment.
We will analyze your ability to pay and contact the IRS to set you up on the best plan for you. Most of the times we arrange for a payment plan with monthly payments substantially less then the IRS' first demands

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IRS DEBT - PENALTY ABATEMENT

Individual IRS debt can escalate with alarming speed. This is because a large portion of the taxpayer's delinquent bills are composed of interest and penalties. Interest and penalties like an IRS lien alone can turn what would ordinarily be a moderate tax challenge into a major ordeal.
The good news is that having past tax penalties like wage garnishment and interest removed (or altogether stopped) is definitely possible. Moreover, if one did not pay penalties and interest correctly, one may qualify for a tax refund.
Pending the fulfillment of specific requirements, the IRS might remove the penalties and interest - either partially or in full. In the event that one can present reasonable cause for failing to pay one's taxes, confirm that no neglect characterized one's attempts to repay the tax debt in question, and verify that due diligence was implemented, the attainment of relief becomes more probable.
If you need tax help, our experts at PowerTax Relief will review your circumstances and determine if you meet the qualifications for penalty abatement. If you do, we will work with you to gather all of the necessary information and documents to put together an abatement package. We will then prepare the paperwork and submit it to the IRS on your behalf.

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As a taxpayer, you have rights...

There is nothing worse than having the Internal Revenue Service or another taxing authority such as the California State Board of Equalization (SBE), the California Franchise Tax Board (FTB), or the California Employment Development Department (EDD) chasing after you. However, as a taxpayer, you have rights, including the right to consult a tax lawyer.
We understand that dealing with a tax problem, whether it is a tax audit by the IRS, a California sales tax audit by the State Board of Equalization or a payroll tax problem with the Employment Development Department, can be a very stressful experience. Therefore, our tax lawyers work not only to minimize the taxes our clients owe, but also to reduce their stress by taking the weight of dealing with the IRS on a day-to-day basis off their shoulders.
There are many excellent California tax attorneys and tax lawyers. Most of those tax attorneys handle tax planning. They can tell you how to most efficiently plan your affairs to lower your taxes, and how to prevent tax problems from occurring. However, relatively few tax lawyers are tax litigation lawyers, or tax controversy lawyers. Tax litigation lawyers represent clients who have tax problems with the IRS or state taxing agencies. For example, if you or your company undergoes a tax audit a tax controversy attorney can represent you at that audit, or in any tax appeal from that tax audit. A tax litigation attorney can represent you in Tax Court, or any other appropriate court which may include the District Court, the Court of Federal Claims, or even the Bankruptcy Court. If you have a tax problem with a California tax agency a tax litigation lawyer can represent you in California Superior Court or before the Employment Development Department, Franchise Tax Board, or State Board of Equalization.
A tax controversy attorney can also represent you if you have a tax collection problem, and would like an offer in compromise or an installment agreement to pay your taxes. In addition a tax controversy attorney can represent you in a wide range of tax problems including the abatement of tax penalties, in summons enforcement actions, wrongful levy actions, and in wrongful disclosure suits. A tax controversy lawyer can represent you if you are a tax professional and become subject to IRS enforcement proceedings such as injunction actions against tax return preparers or an alleged violation of Circular 230. In short if you have a tax problem, a tax litigation attorney can help you.

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Criminal Tax Defense

The following are examples of Internal Revenue Service Criminal Prosecution Investigative proceedings:
Not only does the Internal Revenue Service (IRS) enforce civil tax laws, but it can also impose criminal charges leading to a conviction, fines and imprisonment.
If an IRS Special Agent ever contacts you personally, this may mean that they are conducting a criminal investigation. IRS Agents are known to visit the residences of you, your neighbors, and your place of employment.
If your bank notifies you that the Criminal Investigation Division of the IRS or the U.S. Attorney's Office is requesting copies of your bank records through a summons, there is a high likelihood that you and/or your company are under criminal investigation.
If your accountant is subpoenaed to appear before the Grand Jury and bring your records, a Federal Grand Jury is being utilized to conduct a criminal investigation of you and/or your company. The Grand Jury is gathering evidence at the request of referral of the IRS or other government agency.
If you receive a notice from the IRS that one or more of your previous tax years are being audited AND you know that the returns filed contain either understatements of income or overstatements of deductions, or both, there is a possibility that you will be investigated by the Criminal Division of the IRS.

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