Problem #5: RETURN PREPARER OVERSIGHT

Taxpayer Advocate Service – 10 Most Serious Problems Encountered by Taxpayers

Problem #5: RETURN PREPARER OVERSIGHT

WHY THIS IS A SERIOUS PROBLEM FOR TAXPAYERS

Tax return preparers prepare over half of the individual income tax returns filed on an annual basis. Taxpayers, the IRS, and our voluntary tax system rely on the quality and integrity of these preparers.

Return preparers are the frontline defense in preventing fraud and errors, and they play an essential role in tax administration.

Many of them, however, have no credentials and are subject to no minimum standards, such as competency tests and continuing education. However, our tax laws are complicated, and our economic and social situations are complex.

The absence of practice requirements and IRS oversight exposes taxpayers to a greater risk of incompetent or unethical actions by preparers. Because taxpayers bear responsibility for the accuracy of their own returns, inept or dishonest preparers harm taxpayers by subjecting them to unanticipated tax deficiencies, penalties, interest, overpaid taxes, or lost refunds. Furthermore, taxpayers’ sensitive financial and personal information must be safeguarded by preparers who have a high degree of tax knowledge, education, and ethical standards.

For more information on this problem, please see the Taxpayers Advocacy Web page (www.TaxpayerAdvocate.irs.gov)

Next week Tuesday Tax Tip will discuss Problem 6

(www.TaxpayerAdvocate.irs.gov) (TTT 112624)