The Internal Revenue Service is joining with several national tax and accounting organizations to give taxpayers new options and tips on selecting reputable tax professionals and avoiding unscrupulous preparers.
The effort includes new information available at IRS.gov/chooseataxpro, including a list of consumer tips for selecting a tax professional. There will also be a new gateway page with links to national nonprofit tax professional groups, which can help provide additional information for taxpayers seeking the right type of qualified help.
IRS commissioner John Koskinen spoke at a press conference Thursday in Washington, D.C., in conjunction with members of several national organizations that represent hundreds of thousands of tax professionals across the nation. The other groups involved in the initiative include the American Association of Attorney-CPAs, the American Institute of CPAs, the Council for Electronic Revenue Communication Advancement, the National Association of Enrolled Agents, the National Association of Tax Professionals, the National Conference of CPA Practitioners, the National Society of Accountants and the National Society of Tax Professionals.
“The tax return represents one of the biggest financial transactions of the year for many Americans, whether they are getting a refund or paying a tax bill,” IRS Koskinen said in a statement. “Filling out tax returns accurately is critically important. Between tax law changes and tax scams circulating, it’s more important than ever for people who need professional assistance to select wisely and carefully.”
More than 140 million tax returns were filed last year, and more than half of with them, about 75 million, were prepared with the help of a paid return preparer.
“With the upcoming filing season, some taxpayers may want to get help with the new provisions of the Affordable Care Act, and tax professionals provide one of several options available,” Koskinen told reporters. “Most people only have to check a box on their Form 1040 return to indicate they have health care coverage, but some taxpayers claiming exemptions from coverage and those without coverage and those with premium tax credits may have questions. Tax professionals will be able to help guide taxpayers through what they need to do in these circumstances.”
Commercial software programs will be able to help as well, he acknowledged. “Taxpayers who decide to hire a professional to help prepare their taxes should make sure to select that person carefully,” said Koskinen. “I’ve been a commissioner for almost a year now, and one of the things that still surprises me is the number of scams circulating out there. We especially want to warn people about one type of scheme prevalent at tax time in particular where scam artists pose as tax preparers, make misleading promises to entice people to cut corners on their taxes, or even commit outright fraud in order to get bigger refunds. Last year we saw nearly 200 abusive tax return preparers receive criminal convictions. We want to get the word out to taxpayers not to be duped by unscrupulous preparers. It’s important to find a reliable trusted tax professional to assist you with your taxes.” He highlighted some basic points that taxpayers should keep in mind when selecting a tax professional, such as checking the preparer’s qualifications and work history.
“Also find out what they charge, and ask if they offer electronic filing,” said Koskinen. “And remember to review your return before it’s filed and never sign a blank return. If a preparer encourages you to do that, it’s a red flag that they’re not on the up and up and you should be careful.”
He noted that the IRS’s Web site, IRS.gov, contains advice on finding a reliable preparer and now provides links to outside tax professional organizations that can help.
“Few things seem to be easy with taxes, and we realize it may not be easy for taxpayers to navigate the different types of professional tax assistance available and determine what’s right for them, so the IRS is taking new steps to help,” said Koskinen. “I’m pleased to announce that we’re launching a new page on IRS.gov that explains the different categories of tax professionals, which will help make it clearer what kinds of help are available for taxpayers. You’ll also find a new partner page that has links to Web sites of national organizations for various types of tax professionals, which have members or chapters in state and cities across the nation.”
All of these steps are aimed at providing taxpayers additional information to help them understand the options available if they need professional assistance, he noted. That will include a new online directory next year as part of the IRS’s recent efforts to offer a voluntary tax preparer continuing education and testing program after the federal courts invalidated its Registered Tax Return Preparer program.
“As part of this effort, we’ll also be offering a new directory on IRS.gov beginning early next year which will help taxpayers find tax professionals with credentials or certain qualifications in their local area,” said Koskinen. “The database will be sorted by type of preparer, including CPAs, attorneys, enrolled agents and other preparers, including those who have participated in the IRS’s new voluntary education program, called the Annual Filing Season Program. Preparers in this program may not have the same credentials as the categories of tax professionals I just mentioned, but they have completed a tax preparation education program. I would note that while it’s helpful for a preparer to participate in our Annual Filing Season Program to give taxpayers some comfort in their choice of preparer, the training offered under the program does not give a preparer the same level of expertise that CPAs, attorneys and enrolled agents have.”
Koskinen also noted that there is some free tax preparation help available for low-income taxpayers, the elderly, people with disabilities and those who have limited proficiency in English. The IRS supports thousands of Volunteer Income Tax Assistance and Tax Counseling for the Elderly sites around the country, he pointed out. In addition, the IRS’s Free File program offers free federal tax protection and efile options for all taxpayers in conjunction with tax software providers.
“Finally, I want to stress the IRS will continue doing all it can to make sure that people are able to fulfill their tax obligations as quickly and as easily as possible, and that includes understanding the professional options available to them,” said Koskinen. “We want everyone to understand the different types of professional help that is available and the different categories of tax professionals. I urge everyone to take a few minutes to go to IRS.gov to review the tips and check out the information on our new partner page. We want people to choose wisely so they have the tools they need and can prepare and file their returns accurately and with a minimum of burden. Filing taxes is one of the biggest financial transactions of the year for many Americans. I urge people to take the time to get it right. It makes good common sense and good financial sense as well.
Koskinen was also asked by reporters about the latest round of budget cuts that Congress just imposed on the IRS, the fifth consecutive year of cuts at the agency (see Congress Slashes IRS Budget Another 3 Percent). He noted that although the cut was officially $350 million, it really translated into a $600 million cut when other expenses were factored in. He noted that the IRS had already slashed many programs and he warned that wait times could increase. The IRS might even be forced to close on certain days, but only as a last resort.
“We are at a point where if you make any further cuts in this organization, the wheels start falling off,” he said.
He warned that the IRS is "well beyond cutting any fat and is now cutting into the bone. Everything we're cutting out is something we want to do." He cautioned that there was not "any more give" in the system, and the budget cuts could lead to delayed tax refunds and laxer enforcement against tax cheats.
"Everybody's return will get processed, but people have gotten very used to being able to file their return and quickly getting a refund," said Koskinen. "This year we may not have the resources, the people to provide refunds as quickly as we have in the past."
In a memo sent to IRS employees earlier on Thursday, Koskinen informed them that the agency would freeze hiring and stop most overtime pay and warned that it won’t be able to answer about half the calls it receives this tax season (see IRS Freezes Hiring, Warns of Busy Signals after Budget Cuts). He told reporters that the hiring freeze did not affect the seasonal employees who have already been added to deal with tax season, but it could affect whether they would be offered an extension to stay on past their contracts.
Koskinen was also asked about delays on the IRS’s Practitioner Priority Line, which is supposed to expedite service to tax professionals, but has also fallen victim to delays due to the budget cuts. “I am concerned that the Practitioner Priority Line is becoming an oxymoron,” he acknowledged.
He was also asked about Congress's late passage of the tax extenders legislation and whether that would delay tax season. He said the IRS is going through the legislation, but since it contained few changes and seemed like a straightforward extension, he did not anticipate a delayed tax season.
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