TAX NEWS - January 2010

Frequently Asked Questions IRS Letters and Visits to Tax Return Preparers - 2010 Tax Filing Season

This month IRS began taking action  to step up oversight of tax preparers by sending out more than 10,000 letters to tax preparers who have filed large volumes of specific tax returns where the IRS typically sees frequent errors. The letters remind these tax return preparers of their obligation to prepare accurate tax returns.

Later this month IRS agents will visit thousands of tax preparers who receive the letters.


What letter is the IRS sending to tax return preparers? What does the letter say?

This is part of a broader initiative by the IRS to step up its efforts to ensure paid tax return preparers are assisting clients appropriately. These letters will inform tax preparers about the kinds of common errors the tax agency is seeing on specific tax returns.

Text of Letter to Tax Return Preparers is posted on the Tax Return Preparer Review page on IRS website.


Who will receive the letter?

Tax preparers receiving the letters are among those with large volumes of specific tax returns where the IRS typically sees frequent errors. The letters are intended to remind preparers to be vigilant in areas where the errors are frequently found.

Specifically, the letters will encourage return preparers to:

- Review pertinent books and records of Schedule C filers.
- Determine the correct itemized deductions of Schedule A filers. 
- Make sure those who claim dependents and the EITC are entitled to do so.
- Ask first-time homebuyers the right questions to make sure they qualify for the First Time Homebuyer Credit.


How many letters is the IRS distributing to tax return preparers?

The IRS is sending approximately 10,000 letters nationwide to the return preparer community.


What is the purpose of the letter?

Specifically, the letters will encourage tax return preparers to:

- Review pertinent books and records of Schedule C filers to accurately compute income and expenses.
- Determine the correct itemized deductions of Schedule A filers. 
- Make sure those who claim dependents and the EITC are entitled to do so.
- Ask first-time homebuyers the right questions to make sure they qualify for the First Time Homebuyer Credit.

The letters will also remind tax return preparers of the consequences of filing incorrect returns. This includes monetary penalties, suspension or expulsion from participation in IRS e-file, civil injunctions barring the return preparer from preparing tax returns and referral for criminal investigation.


How many tax return preparers will be visited by IRS Revenue Agents?

Beginning in late January, IRS Revenue Agents will visit thousands of tax preparers who receive these letters to review common errors and to discuss their obligations and responsibilities to prepare accurate tax returns.


Will the Revenue Agent's visit take place in tax return preparer's office or at an IRS office?

In general, the IRS Revenue Agent will visit the tax return preparer's place of business or a mutually agreed upon location; the visit is expected to last approximately three hours.


Will IRS revenue agents assess return preparer penalties during these visits?

No. The purpose of this visit is to remind tax return preparers of their obligation to file accurate tax returns on behalf of their clients. This is not a compliance audit.