The House Ways and Means Oversight Subcommittee plans to hold a hearing next Thursday on the Internal Revenue Service’s recent efforts to step up regulation of tax return preparers.

“This hearing is a continuation of the Subcommittee’s oversight of the IRS and the alarming rates of tax noncompliance,” Charles W. Boustany Jr., R-La., who chairs the subcommittee, said in announcing the hearing Thursday. “With so many Americans relying on paid professionals to prepare their returns, it is critical that we better understand what the IRS is doing and what impact the new regulations will have on taxpayers, paid tax return preparers, and tax compliance.”

He noted that approximately 60 percent of taxpayers pay a professional to prepare their federal income tax returns.  The Government Accountability Office has released a number of reports recommending stronger oversight of the tax preparer community.  Among the GAO’s concerns are tax preparer errors that lead to improper payments, including an estimated $106 billion in improper refundable tax credits in recent years. 

The IRS initiated a tax return preparer initiative last year to stop erroneous returns and created a new category of paid return preparer: the “registered” tax return preparer. As of Jan. 1, 2011, anyone who is paid to prepare “all or a substantial portion” of a tax return is required to obtain a Preparer Tax Identification Number. They will also be subject to testing, background checks, continuing professional education, and certain ethical standards, according to Boustany. To date, approximately 717,000 individuals have received PTINs.  

In January 2010, the IRS estimated that the program would take three years to be fully implemented and to show results in reducing improper payments to the clients of these preparers. However, a year and a half later, the GAO has urged the IRS to provide measurable performance goals and communicate better with tax practitioners about the new requirements.

The hearing will focus on reviewing the new requirements, assessing the amount of progress made by the IRS so far in preparing and implementing a program work plan, and understanding how it will ultimately impact the tax preparer community and taxpayers.

Written comments can be submitted to the committee at its home page, http://waysandmeans.house.gov, under the “Hearings” selection.

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