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IRS to Develop Tax Preparer Database

Taxpayers will soon have access to a database maintained by the IRS that will allow them to search for tax professionals who are registered to prepare tax returns.  The database will include not only those preparers who have passed the Registered Tax Return Preparer (RTRP) competency exam, but all preparers who have an active Preparer Tax Identification Number (PTIN).  This includes Enrolled Agents, CPAs, attorneys, and registered tax professionals.

This database will include the names, addresses, and professional qualifications of tax preparers, as well as any publicly disclosed professional disciplinary actions.  Essentially, it will allow taxpayers to shop around for a preparer who is qualified to meet their needs.  David Williams, director of the IRS Return Preparer Office, said in a statement before the House Ways and Means Committee’s oversight subcommittee, “The goal is to ensure that taxpayers receive top quality service from this important industry.”  Taxpayers may be able to search the database for qualified preparers as early as next year.

This new tax preparer database is another step in the IRS’s phased-in regulation of tax preparers that began in 2010. Tax professionals who receive compensation for their tax preparation services must register with the IRS and obtain a PTIN, pass a RTRP competency exam, and fulfill annual continuing education courses unless they are in professions, such as law and accounting, with their own professional standards.   The main purpose in these regulations is to reduce the number of errors made on tax returns that sometimes lead to fraudulent practices by tax preparers.

So far, approximately 717,000 preparers have registered with the IRS.  There are 100,000 or so preparers who are currently being contacted by the IRS that prepared returns this year and didn’t comply with registration requirements.  Tax professionals must renew their PTIN annually and pass the competency exam by December 31, 2013.

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