Media Relations Office Washington, D.C. Media Contact: 202.622.4000
www.IRS.gov/newsroom Public Contact: 800.829.1040
IRS Continues to Increase Oversight of Tax Return Preparers to Improve
Compliance, Taxpayer Service
IR-2010-44, April 7, 2010
WASHINGTON — As the April 15 tax deadline approaches, the Internal Revenue Service
today announced initial results from its stepped-up effort involving enforcement and
education to combat unscrupulous tax return preparers and protect the nation’s taxpayers.
The IRS said it has conducted more than 5,000 field visits to tax return preparers this fiscal
year. In addition, the IRS has worked with the Department of Justice to pursue
questionable return preparers, an effort that has led to 56 indictments, 25 convictions and
21 civil injunctions since Jan. 1, 2010.
“We are working to help ensure taxpayers receive competent and ethical service from
qualified tax professionals,” said IRS Commissioner Doug Shulman. “Our efforts this tax
season are part of a longer-term effort to improve the oversight of this critical part of the tax
system. The vast majority of tax return preparers provide solid service, but we need to do
more to protect taxpayers.”
Shulman announced in January the results of a six-month study of the tax return preparer
industry, which proposed new registration, testing and continuing education of tax return
preparers. With more than 80 percent of American households using a tax preparer or tax
software to help them prepare and file their taxes, higher standards for the tax return
preparer community will significantly enhance protections and service for taxpayers,
increase confidence in the tax system and result in greater compliance with tax laws over
the long term. While this longer-term effort is underway, the IRS has taken several
immediate steps this filing season to assist taxpayers.
Enforcement Efforts
The IRS has worked closely with the Justice Department this tax season to increase legal
actions against unscrupulous tax return preparers, obtaining 21 civil injunctions, 56
indictments and 25 convictions of return preparers so far in 2010. More information is
available at the IRS Civil and Criminal Actions page on irs.gov. and at the Department of
Justice Tax Division page on DOJ.gov.
“The IRS appreciates the strong support of the Justice Department for its efforts to pursue
and shut down bad actors in the tax return industry,” Shulman said. “This effort makes a
real difference for the nation’s taxpayers and helps protect the many tax professionals who
play by the rules.”
“While the majority of return preparers provide excellent service to their clients, a few
unscrupulous tax preparers file false and fraudulent returns to defraud the government and
the tax-paying public. Those actions are illegal, and can result in substantial civil penalties
as well as criminal prosecution, for both the return preparers and their customers who knew
or should have known better. Taxpayers should choose carefully when hiring a tax
preparer,” said John A. DiCicco, Acting Assistant Attorney General of the Justice
Department’s Tax Division.
Also during this filing season, the IRS used investigative tools on a broad basis, including
agents posing as taxpayers, to seek out and stop unscrupulous preparers from filing
inaccurate returns. To date, the IRS conducted 230 undercover visits to tax return
preparers. In addition, dozens of search warrants have been completed.
The IRS will continue to work closely with the Department of Justice to pursue civil and
criminal action as appropriate.
Education Efforts
In January, the IRS sent more than 10,000 letters to tax return preparers. These letters
reminded them of their obligation to prepare accurate returns for their clients, reviewed
common errors, and outlined the consequences of filing incorrect returns. The letters went
to preparers with large volumes of specific tax returns where the IRS typically sees frequent
errors, although simply receiving a letter was not an indication the preparer had problems.
The IRS followed up with field visits to about 2,400 tax return preparers who received these
letters to discuss many of the issues mentioned in the letter. Separately, the IRS conducted
other compliance and educational visits with return preparers on a variety of other issues.
All told, IRS representatives visited more than 5,000 paid preparers to encourage and help
them avoid filing incorrect or fraudulent returns for their clients.
The IRS will be reviewing the results of these letters and visits to determine steps for future
filing seasons.
Future Efforts
The IRS has recently begun to implement a number of steps to increase oversight of
federal tax return preparers. This includes proposed regulations that would require paid tax
return preparers to obtain and use a preparer tax identification number (PTIN). Later this
year, the IRS will propose additional regulations requiring competency tests and continuing
professional education for paid tax return preparers who are not attorneys, certified public
accountants and enrolled agents.
Setting higher standards for the tax preparer community will significantly enhance
protections and services for taxpayers, increase confidence in the tax system and result in
greater compliance with tax laws over the long term. Other measures the IRS anticipates
taking are highlighted in Publication 4832, Return Preparer Review, issued earlier this year.
Help for Taxpayers before April 15
As the tax deadline approaches, the IRS reminds taxpayers that most tax return preparers are
professional, honest and provide excellent service to their clients. But a few simple steps can
help people choose a good tax return preparer and avoid fraud:
Be wary of tax preparers who claim they can obtain larger refunds than others.
Avoid tax preparers who base their fees on a percentage of the refund.
Use a reputable tax professional who signs the tax return and provides a copy.
Consider whether the individual or firm will be around months or years after the return has
been filed to answer questions about the preparation of the tax return.
Check the person’s credentials. Only attorneys, CPAs and enrolled agents can represent
taxpayers before the IRS in all matters, including audits, collection and appeals. Other
return preparers may only represent taxpayers for audits of returns they actually prepared.
Find out if the return preparer is affiliated with a professional organization that provides its
members with continuing education and other resources and holds them to a code of
ethics.
More information is available on IRS.gov, including IRS Fact Sheet 2010-03, How to Choose a
Tax Preparer and Avoid Tax Fraud.
—30—
http://www.irs.gov/pub/irs-news/ir-10-044.pdf
