Legal Responsibilities of Tax Preparers

The short answer to this question is that a paid preparer cannot lie or advise a client to lie about any part of a return. Professional tax preparer organizations have a higher standard than does the IRS for paid preparers but that is changing.

Essentially, the tax preparer is just filling in the boxes based on what the client tells them and that’s acceptable.

Government Oversight of Paid Tax Preparers

The IRS is perpetually concerned with what they call the tax gap. That’s the difference between what they project in tax revenue and what is actually reported by individuals and organization. They are confident that a large part of this gap is the result of fraudulent completion of returns. Nearly 80% of all returns are prepared by paid tax preparers or tax software programs. To correct this problem, the IRS has decided to register all preparers and software and require a minimum skills test.

This registration process will kick in 2011. The hope is to eliminate the marginal preparers, cause software providers to more closely evaluate their products and increase the accuracy (and honesty) of the returns. The IRS simply does not have the resources to do an in depth analysis of every return it gets and must rely on these preparers to do a fair job.

What does that mean? It means that the government wants the preparer to be held to a higher standard than that of the individual tax payer. They after all know or should know all the latest tax rules. If a preparer has first hand knowledge that data provided by the client is inaccurate, then the IRS wants to take the position that the preparer should either demand accurate data or refuse to complete the return. This would be a major change in position from the way this industry has operated for years. This article is for informational purposes only, not legal advice.

Learn what legal rights a tax preparer has related to taxes filed by their clients by visiting www.ThornTaxLaw.com – Thorn Law Group of Washington DC.