Boustany Announces Hearing on New IRS Paid

Tax Return Preparer Program 

Congressman Charles W. Boustany, Jr., MD, (R-LA), Chairman of the Subcommittee on Oversight of the Committee on Ways and Means, today announced the Subcommittee will hold a hearing on the new IRS paid tax return preparer program. The hearing will take place on Thursday, July 28, 2011, in Room 1100 of the Longworth House Office Building, beginning at 9:30 A.M.

In announcing the hearing, Chairman Boustany said, “This hearing is a continuation of the Subcommittee’s oversight of the IRS and the alarming rates of tax noncompliance.  With so many Americans relying on paid professionals to prepare their returns, it is critical that we better understand what the IRS is doing and what impact the new regulations will have on taxpayers, paid tax return preparers, and tax compliance.”

BACKGROUND:

Approximately sixty percent of taxpayers pay a professional to prepare their Federal income tax returns.  The Government Accountability Office (“GAO”) has long noted the impact of these preparers on tax compliance and the need for stronger oversight of the tax preparer community.  Among GAO’s concerns are errors by tax return preparers that affect improper payments, including an estimated $106 billion in improper refundable tax credits in recent years.  

In response to these and other concerns, the IRS initiated a tax return preparer initiative to stop erroneous returns at the source, rather than through the laborious and expensive audit process.  The program has created a new category of paid return preparer: the “registered” tax return preparer.  

As of January 1, 2011, anyone who is paid to prepare “all or a substantial portion” of a tax return is required to obtain a Paid-Preparer Tax Identification Number (“PTIN”).  These registered tax return preparers will be subject to several requirements, including registration, competency testing, background checks, continuing professional education, and certain ethical standards.  To date, approximately 717,000 individuals have received PTINs.  PTINs issued to individuals who are not attorneys, certified public accountants, or enrolled agents, will only be valid until 2013, when the preparers must meet the additional requirements.  

In January 2010, the IRS estimated that the program would take three years to be fully implemented and to show results in reducing improper payments to the clients of these preparers.  However, a year and a half later, GAO has urged the IRS to provide measurable performance goals and better communicate with tax practitioners regarding the new requirements.