I hear from people every week who think their tax problem is the end of the world. It usually isn't. I'm Darrin Mish. I've resolved over $100 million in tax debt for clients. Here's what you should know.
It appears very few people prepare their own tax returns these days. As many as 90% of American taxpayers engage some sort of paid service to prepare and file their tax returns each year. There are those who rely on small storefront shops while others prefer to engage big time tax service companies. These do not include those who buy DIY tax preparation software such as the popular Turbo Tax software sold by Intuit Inc.
This practice is not necessarily the best as it has been found that as many as 61% of tax returns prepared by paid preparers contained errors in a sample of returns in 2008. Out of those, about 35% were classed as caused by willful or reckless misconduct. Hence the government, in particular the IRS is considering addressing this issue through various means aimed at injecting a higher standard of professionalism and competence into the industry.
Presently, tax preparers act almost entirely independently without restraint, control or supervision by the authorities. Surprisingly, several government reports state that the services provided by the paid tax preparers were often more erroneous and inferior compared to that of volunteer tax preparers. Furthermore, there are other more commonplace industries that are subject to greater supervision and stricter controls than the tax preparation industry. Hence, the IRS is considering various options on how to better monitor the services provided by these tax preparers especially the paid ones. Only certain professionals like CPAs and lawyers who have a strict code of conduct to adhere to operate under federal guidelines. It has sought the views of officials from Maryland, California, Oregon and New York, states that are reputed to have stricter rules for preparers than the federal government.
Two of the nation’s biggest tax preparation service companies, H&R Block and Jackson Hewitt Tax Service generally support the idea of legislating the industry. H&R in particular, stated in a letter dated August 31st that measures taken should include strict enforcement and maintenance of a level of basic competency. Of course, they would benefit from whatever enforcement steps the government takes if they weed out the smaller companies that cannot comply. Measures to instill higher standards of service include imposing fees, competency tests and compulsory registration.
According to Doug Shulman, Commissioner of the IRS, tightening regulations is on the cards and a proposal will be made to Timothy Geithner, Secretary of the Treasury by the end of this year.
Check out more IRS Reports stories by clicking that link.