Treasury Inspector General for Tax Administration
July 20, 2009
Contact: Robert Sperling
The Internal Revenue Service (IRS) should require paid tax return preparers to use unique identification numbers when filing tax returns on behalf of clients, the Treasury Inspector General for Tax Administration (TIGTA) recommended in a report publicly released today.
TIGTA's audit found that the IRS cannot easily track preparers' activities and compliance with tax laws. Preparers currently are required to identify themselves on tax returns they file on behalf of clients using either their Social Security numbers or Preparer Tax Identification numbers. IRS data on preparers is stored on twenty-two different systems, which are not integrated.
"The IRS currently is not able to track, monitor or control preparers’ activities and compliance, or even determine the total number of paid tax return preparers," commented J. Russell George, the Treasury Inspector General for Tax Administration. "As a result, the IRS currently is not capable of ensuring that paid preparers adhere to professional standards and follow the law."
The report is TIGTA's ninth report on preparer-related issues since 2001. TIGTA recommended that the IRS require a unique identification number for preparers in 2006 (The Office of Professional Responsibility Can Do More to Effectively Identify and Act Against Incompetent and Disreputable Tax Practitioners, Reference Number: 2006-10-066, issued March 31, 2006) and again in 2008 (Most Tax Returns Prepared by a Limited Sample of Unenrolled Preparers Contained Significant Errors, Reference Number: 2008-40-171, issued September 3, 2008).
In the new report, TIGTA also recommended that the IRS require tax return preparers to be compliant with their own Federal tax filing requirements, enforce existing penalties on preparers who do not provide identification numbers on returns they prepare and develop a database management system that would allow the IRS to identify all preparers.
The IRS said it would develop a preparer database and begin imposing penalties on preparers who do not provide identification numbers. It agreed in principle to TIGTA’s other recommendations.
To view the report, including the scope, methodology, and full IRS response, go to: https://www.treasury.gov/tigta/auditreports/2009reports/200940098fr.pdf
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