The Senate Finance Committee has announced a September 16 markup of a bill to regulate tax return preparers and make other changes designed to help combat identity theft and tax refund fraud.
There are two things to note with this bill as it relates to tax return preparer regulation. One is that the Finance Committee intends that examinations offered by third parties such as the Accreditation Council for Accountancy and Taxation and by various states such as Oregon and Maryland would be recognized by the IRS for regulatory purposes. The second is that this proposed bill is offered by the Republican Chair of the Finance Committee, Sen. Orrin Hatch. Every tax return preparer bill that has been proposed in this and prior Congresses has been offered by Democrats.
The bill, as yet unnumbered, proposes the following changes, among others:
1. Tax Return Preparers:
a) The bill would give the IRS authority to regulate all aspects of tax practice, without regard to whether or not the activity involves representation before the Treasury or IRS.
b) IRS would be authorized to revoke identifying numbers such as PTINs from tax return preparers who fail to comply with the regulations under the Internal Revenue Code or Circular 230.
c) The IRS would be encouraged to “expeditiously:
(i) approve third-party examination and continuing education providers for purposes of allowing individuals to obtain registered tax return preparer status;
(ii) establish a program for evaluating and approving State-based tax credential programs for purposes of providing individuals with registered tax return preparer status; and
(iii) end the voluntary Annual Filing Season Program.”
2. Modify due dates for information returns. The the proposal accelerates the filing of Forms W-2 and W-3, and Forms 1099-MISC (providing non-employee compensation, rents, prizes and awards, etc.).
3. Require the IRS to study the feasibility of blocking electronically-filed tax returns.
4. Require that electronically-prepared paper returns include a scannable code.
5. Require the IRS to verify the identity of any individual opening an e-Services account before he or she is able to use such services.
6. Permit enrolled agents meeting the Secretary’s qualifications to use the designation “enrolled agent,” “EA,” or “E.A.”
A description of all of the provisions in the proposal – any of which may affect your specific tax practice – is available here.