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TAX NEWS - 2010

Tax Preparer Registration - 4 Facts You Need To Know

As time ticks closer to the beginning of new tax preparer certification rules, many in the tax industry say it's a bad move for everyone. Critics say the new tax preparer regulations will drive some companies out of business, while also making it tougher for everyday tax-paying citizens.

On Sptember 1, 2010, the tax preparer registration process will begin, meaning that each tax preparer will have to be approved by the IRS. By the spring of 2011, each tax preparer will have to take competency tests and enroll in continuing education classes. Once the tax preparer certification process is complete, each tax preparer must follow ethical rules created by the Department of Treasury.

As would be expected, there will be tax preparer registration fees and other costs associated with this tax preparer certification process. It's those costs that could be very damaging to the tax industry and taxpayers. Consider the following:

1) Tax preparer registration is only good for three years, and the fee to register ranges from $75-$300 per tax preparer. That means tax preparation companies will have to spend thousands of dollars just to get all of their employees registered. Then, there's the cost of the competency tests and continuing education classes. Think about how those costs could affect a small, local business. If they cannot afford to go through the tax preparer certification process, they will have no choice but to go out of business.

Now, think about how those added costs could affect regular citizens. Companies likely will not absorb all of the costs of tax preparer certification; they'll simply pass the costs onto consumers, making it more expensive for you to get tax help.

Or, if small tax companies start to go out of business, it will be harder for taxpayers to get tax help. It's simple supply and demand; if there are fewer tax preparers, there are fewer people to help you prepare your taxes. Would you be able to do your taxes without any help?

2) Tax preparer registration begins in September, and everyone must be registered by the 2011 tax season. That means the IRS only has a few months to certify more than a million tax preparers. What if paperwork gets lost in the bureaucratic shuffle? A tax preparer who registered on time may have to miss a season's worth of business if his paperwork is not reviewed in time. For most businesses, missing out on an entire season would ruin them.

3) The IRS has not released much information about what happens if people do not prepare with the new tax preparer regulations. According to the IRS, they will be on the lookout for people who are not complying with tax preparer certification rules, but they have not said what the punishments will be. This has left many tax preparers afraid of the unknown.

The good news for tax preparers is that several organizations like the National Board of Tax Practitioners are offering assistance. The NBTP is offering a free workshop titled "How to Survive IRS Tax Preparer Regulations" these workshops are being offered in select cities throughout the nation. Over 45 workshops presentations will be offered, in both English and Spanish. Attendees will receive detailed information on how to comply with the new IRS regulations. The workshop will also provide valuable industry details regarding client retention and the future of bank products known as refund anticipation loans and electronic refund transfers.
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