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IRS approves voluntary courses for unregulated tax preparers

The majority of taxpayers, including in Nevada, do not do their own returns. Instead, they hire someone to do it for them. The IRS recognizes and regulates a group of “federally authorized tax practitioners,” who consist mainly of CPA’s, attorneys, and enrolled agents. These FATPs are generally experienced and trained individuals who are allowed to represent taxpayers during audits, appeals and conferences.

The remaining general category of persons who also attempt to conduct some of the representational activities are referred to as “unregulated” preparers. The activities of these less qualified individuals are limited to preparing tax returns and limited questions or discussions with IRS agents. The IRS has become concerned that the unregulated tax preparers have been found to commit more errors.

Consequently, the agency attempted to bring these people within some framework of training that will give assurance of at least some degree of basic competency. Thus, the IRS tried to impose a mandatory system of education and qualifications on this category of preparers. However, they ran into obstacles in the form of negative federal court opinions holding that the agency was overstepping its bounds.

As a result, the agency dropped that idea. However, it has initiated a new idea whereby it offers an educational program approved by the IRS, that is open on a voluntary basis to unregulated preparers. In the near future, the agency will have a working database available to citizens to determine which preparers are regulated and which have certificates.

The new program will be available throughout the country, including in Nevada. The volunteers will obtain a certificate in return for 18 hours of annual course training. Some groups, however, including the Certified Public Accountants, object to the certificates, which they believe will give taxpayers a distorted view of the degree of training of the certificate-holders. Despite the controversy and possible confusion, the IRS will move forward on the program in what appears to be a good faith attempt to upgrade the level of services available to taxpayers.

Source: Albuquerque Journal, "IRS targets unregulated tax preparers", James Hamill, July 21, 2014

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