The IRS has announced that it plans to undertake a review of tax return preparers in an effort to improve compliance with the tax laws and ensure the ethics of tax return preparers. It plans to make recommendations on a new regulatory structure to President Barack Obama and Treasury Secretary Timothy Geithner by the end of 2009. In doing so, the IRS plans to solicit input from the community and tax practitioners (lawyers, CPAs, accountants and enrolled agents), as well as unlicensed tax preparers and software vendors.
There has been a need for revision to the regulatory structure governing practice before the Internal Revenue Service for many years. In its most recent attempt in 2005, the Treasury modified the existing Circular 230 that governs tax practice. Those regulations were met with resistance by the tax practitioner community on the basis that the language was overly broad and could inadvertently drive up the cost of tax representation to the public. The revisions in 2005, by its language, appeared to impose burdensome requirements on even the most straight-forward tax advice. As such, almost all correspondence from tax practitioners began to carry a Circular 230 disclaimer prohibiting clients from relying on the tax advice to avoid penalties. Hopefully, this new initiative by the government will result in better a regulatory scheme for tax practitioners.
Revisions to the 2005 version of Circular 230 are long overdue. However, any professionals that bump up against the tax law should note that the Internal Revenue Service’s definition of tax return preparer is quite broad and can include any person that gives advice that, in some fashion, finds its way onto a tax return. So, any new regulations are likely to be rather broad in the definition of tax return preparer.
The IRS will hold public meetings to solicit information and will announce those dates in the future. Readers can come back to this blog for updates on when those meetings will take place.
To read the entire IRS announcement, click here.
There has been a need for revision to the regulatory structure governing practice before the Internal Revenue Service for many years. In its most recent attempt in 2005, the Treasury modified the existing Circular 230 that governs tax practice. Those regulations were met with resistance by the tax practitioner community on the basis that the language was overly broad and could inadvertently drive up the cost of tax representation to the public. The revisions in 2005, by its language, appeared to impose burdensome requirements on even the most straight-forward tax advice. As such, almost all correspondence from tax practitioners began to carry a Circular 230 disclaimer prohibiting clients from relying on the tax advice to avoid penalties. Hopefully, this new initiative by the government will result in better a regulatory scheme for tax practitioners.
Revisions to the 2005 version of Circular 230 are long overdue. However, any professionals that bump up against the tax law should note that the Internal Revenue Service’s definition of tax return preparer is quite broad and can include any person that gives advice that, in some fashion, finds its way onto a tax return. So, any new regulations are likely to be rather broad in the definition of tax return preparer.
The IRS will hold public meetings to solicit information and will announce those dates in the future. Readers can come back to this blog for updates on when those meetings will take place.
To read the entire IRS announcement, click here.
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