Treasury Inspector General for Tax Administration
February 2, 2011
TIGTA - 2011-7
Contact: Karen Kraushaar
WASHINGTON – New Federal oversight of paid tax preparers will not be fully operational until 2014, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
While the Internal Revenue Service (IRS) is requiring an estimated one million paid tax preparers to register and receive Preparer Tax Identification Numbers (PTINs), not all preparers will be required to undergo suitability checks (including compliance with Federal tax laws) and competency tests until 2014.
TIGTA evaluated the planning, design, and initial implementation of the IRS’s return preparer strategy. TIGTA found that the IRS does not currently have the resources, systems, or processes in place to appropriately screen applicants and conduct suitability checks on preparers applying for PTINs.
“While it is encouraging that the IRS is implementing TIGTA’s recommendations to require that each preparer have a unique identification number and comply with Federal tax laws, our review found that more needs to be done,” said J. Russell George, the Treasury Inspector General for Tax Administration. “As a growing number of Americans now use paid preparers to file their returns, the IRS must move forward expeditiously with its preparer oversight program,” Mr. George added.
In June 2009, the IRS launched a review of Federal oversight of paid tax preparers in response to audits by TIGTA and the Government Accountability Office. The IRS subsequently announced plans to register all paid tax preparers; develop a database of paid preparers to use for program compliance; and establish competency testing and suitability checks for all paid tax preparers who are not attorneys, Certified Public Accountants (CPAs), or enrolled agents.
Although the IRS plans to use preparer registration data to identify and take action against preparers who fail to comply with the new regulations, TIGTA found that the IRS’s management information system is not yet fully capable of gathering data on preparers.
TIGTA made several recommendations to improve the IRS’s management of the program. The IRS agreed with some of the recommendations and disagreed with others.
To view the complete report, including the scope, methodology, and full IRS response, go to: http://www.treas.gov/tigta/auditreports/2010reports/201040127fr.pdf.
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