Congress introduces tax preparer regulation bill

A pair of lawmakers introduced bipartisan legislation to regulate tax preparers in the latest effort to ferret out unqualified preparers. Rep. Jimmy Panetta, D-California, and Tom Rice, R-South Carolina, introduced the Taxpayer Protection and Preparer Proficiency Act last week. This legislation would enable the Internal Revenue Service to regulate paid tax preparers and mandate minimum competency standards. The bill has received support from the American Institute of Cs, the National Association of Enrolled Agents and the National Association of Tax Professionals. The bill is the most recent bid to regulate the tax preparer profession. During the Obama administration, the IRS began to roll out the Registered Tax Return Preparer Program, or RTRP, which required registration, testing and continuing education for preparers. But after a lawsuit filed by a group of independent tax preparers in the case of Loving v. IRS, a federal judge invalidated the program in , ruling that the IRS lacked the statutory authority to regulate preparers, although it could still require them to register with a Preparer Tax Identification Number, or PTIN. Since then, regulation of unenrolled tax preparers has been a longstanding goal of the IRS, and the IRS switched to offering a voluntary program known as the Annual Filing Season Program. Cs, enrolled agents and tax attorneys have long been subject to testing and continuing education by professional organizations, however. Since the Loving case, other bills have been introduced in Congress to regulate unlicensed preparers, and the Biden administration included a proposal in its American Families Plan see story. The bill’s proponents noted that due to the current lack of regulation of many preparers, the IRS receives tens of thousands of complaints per year about insufficient services. While tax preparers can be prosecuted for fraud, the current precedent bars prosecution for incompetence. The Taxpayer Protection and Preparer Proficiency Act would require tax preparers to demonstrate competency in preparing returns, claims for refund, and associated documents. The legislation also would require preparers to complete continuing education requirements. In addition, the IRS would be granted the authority to rescind the PTINs of preparers who were found to be incompetent or fraudulent. “Mistakes by incompetent tax preparers have led to many taxpayers getting audited or penalized through no fault of their own,” Panetta said in a statement. “My bipartisan legislation will help prevent such predicaments by allowing the IRS to regulate paid tax preparers and ensure that they are meeting minimum competency standards. Anybody who pays for their taxes to be prepared deserves to know that their tax preparers are professional, proficient and principled and, if not, will be held accountable by the IRS.” The bill would give the Treasury the authority to regulate paid tax return preparers, and clarifies that the authority being provided is to reinstitute the IRS’s paid preparer regulatory program, the RTRP. It would also clarify that certain non-signing preparers — those who prepare returns under the supervision of an attorney, C or enrolled agent — are not required to obtain a PTIN. The bill would also require a GAO study on the sharing of information between the Treasury Department and state authorities about PTINs issued to paid return preparers and preparer minimum standards. Lawmakers contend that the bill would reduce error rates from unqualified preparers. “Folks across America rely on tax preparers and they expect that the preparers are qualified and competent,” Rice said in a statement. “The Taxpayer Protection and Preparer Proficiency Act will reduce error rates, lower risks for taxpayers, and help put a stop to the use of unqualified tax preparers. Since the federal government dictates our obligation to file taxes, we ought to allow the IRS to ensure that those who taxpayers turn to for assistance are well qualified.” The AIC praised the legislation. “We are grateful for the bipartisan leadership shown by Representatives Panetta and Rice to address incompetent and unscrupulous tax return preparers and maintain taxpayer confidence in our tax system,” said AIC president and CEO Barry Melancon in a statement. “For many years, the AIC has steadfastly supported enhancing compliance and elevating ethical conduct throughout the tax preparation industry. Taxpayers need and deserve these protections, and we must ensure that the IRS has the tools it needs to conduct appropriate oversight.” The AIC said Wednesday it would also continue to pursue another consumer-protection measure to look out for taxpayers’ best interest by ensuring truth in advertising. That measure would require unlicensed PTIN holders who represent themselves as a registered tax return preparer in any paid print, television, radio or other advertising display or broadcast a statement directing taxpayers to the IRS website where the differences between the various types of preparers are explained. “The AIC is pleased to endorse this bill and we appreciate Representatives Panetta and Rice for working together to introduce this important legislation,” said AIC vice president of taxation Edward Karl in a statement Wednesday. “Ensuring that tax preparers are competent and ethical, and that the IRS has the tools it needs to conduct appropriate oversight, is critical to maintaining taxpayer confidence in our tax system and protecting the interests of the American taxpayer.” The National Association of Enrolled Agents also lent its support. “This legislation will contribute greatly to the overall professionalism of the tax preparation industry and will go a long way toward protecting taxpayers from unqualified and unscrupulous preparers. We look forward to its enactment,” said NAEA president David W. Tolleth in a statement. The National Association of Tax Professionals is also backing the bill. “The rules governing tax returns are complex, and a robust knowledge of the law is required,” said NATP executive director Scott Artman in a statement. “Additionally, the information required to file a return accurately is highly sensitive. It is important for the IRS to ensure that tax return preparers who are offering their services to the public are held to a standard that corresponds with the importance of the role that they play and the information they have access to.Apply For Ein. Reducing the tax gap will take a combination of efforts, one of which is requiring those who are paid for tax preparation to meet required standards. For these reasons, we believe in the necessity for the regulation of tax return preparers.” At least one tax prep firm is also on board with the bill. “With policymakers in Washington relying more and more on the tax code to assist small businesses — everything from PPP loans to the Employee Retention Tax Credit — it is imperative that preparers be competent and honest,” said Padgett Business Services president and COO Roger Harris in a statement. “This legislation will go a long way to ensuring that.”

ID.me and the child tax credit: How to log in to the IRS portals and unenroll from monthly payments

Provided by CNET To manage your child tax credit payments, you ll need to log in to the IRS website. Angela LangCNET Congratulations! If you meet the requirements, the first advance payment for this year s child tax credit will be automatically deposited into your account or sent by mail in a little over two weeks. That doesn t mean, however, there s nothing for you to do before that money comes July . New IRS portals and tools are open to help you check your eligibility, register for the tax credit if you re a nonfiler, or opt out of the monthly payments if you prefer.  But first you ll have to have an account with the IRS — and that means creating a brand-new ID.me account. An IRS account will give you some important benefits this summer: It lets you update the IRS on your current family situation so you ll receive the correct amount of child tax credit money. You ll also be able to update the tax agency on your banking information and mailing address so you can receive your payments in the right place. We ll explain below how to set up an ID.me account and give you details on unenrolling from the advance payment program. For more, here s how to calculate the estimated total of your child tax credit checks, how to see if you are eligible and what you ll need to do next tax season if you receive payments in . ID.me is an online tool used by the IRS, the Department of Treasury, the Social Security Administration and other government agencies to verify your identification. Once you ve been verified on a site that uses ID.me, you can use the same login information on any other site that uses the secure login service. Right now, the IRS is using ID.me just for its child tax credit tools. If you don t want to collect the advance child tax credit payments this year and would rather get one big payout next year here are some reasons why you might want to, you ll need this account with the IRS to do so. If you already have an IRS account and username, you can use that instead.  Video: Child tax credit: Everything we know CNET Before you get started, you ll want to gather a handful of items, including your Social Security number, a photo ID — such as a driver s license or passport — and a phone or a computer with a camera. . Head to the Child Tax Credit Update Portal and tap the blue button, Unenroll from Advance Payments. On the next page, tap the button marked ID.me Create an account. . ID.me will ask you to confirm your email address and give you the option to set up multifactor authentication — an extra step you can take to prove it s actually you making the request and not someone else trying to access your account. . Next, upload a picture of your photo ID. Then take and upload a selfie, using your phone or computer camera. If you want to use your phone, ID.me will text send a message with a link to take and submit your photos. . Once you ve uploaded your images, you ll enter your Social Security number and confirm other information you ve entered. When you re ready, click Continue. . ID.me will send you a text message confirming that you want to set up an account. If you want to go ahead, click Allow and continue on the ID.me page to send verification to the IRS.  If ID.me is unable to verify you, you will be given the option to have a video call with a Trusted Referee to complete your verification. Here s what it takes for you and your dependents to qualify for the payments. For more financial benefits this year, here s how to save money on child care costs and health care expenses.

What Is a Business Tax ID?

A tax ID for business, also referred to as an Employer Identification Number EIN, is a unique nine-digit number used to identify the tax account of a business entity. An EIN works much like a Social Security number and is offered through the Internal Revenue Service at no cost. Businesses that have employees, and certain others that do not, should file for an EIN. For those without employees, the IRS recommends still filing for an EIN if the business has a Keogh plan a tax-deferred pension plan or is involved with the operation of trusts, estates, farmers co-ops or nonprofit organizations. The United States Department of Labor broadens this definition and recommends that any business required to file a tax return also file for an EIN. Take note that an EIN is different from a State Tax ID, though you might need an EIN in order to register for a State Tax ID for business operations in your state. For instance, in the state of North Carolina, you can register a business online using an EIN or social security number, plus basic business information. While obtaining your EIN is free of charge, there are typically fees associated with state business registration. The IRS offers many different ways to apply for an EIN, with the Internet application being the preferred method. Applying online through the IRS website is also the quickest method, since an EIN is issued immediately at the end of a successful online session. EIN filers who wish to be assisted in person can apply by calling the Business and Specialty Tax Line at — during business hours a.m. to p.m. local time, Monday through Friday. Other filing options include applying by fax or mail. Faxed applications are processed within four business days, while the processing time frame for mailed-in applications is up to six weeks. An EIN is a permanent taxpayer identification number that can never be reused or transferred to another business. As a result, business owners who dissolve an entity or enter into a period of inactivity occasionally request to have an EIN voided. In order to accomplish this task, business owners must mail a written request to the IRS stating the reason they wish to close the account, and include the complete legal name of the entity, the business address and the EIN. Lastly, any applicable tax returns must be filed before the EIN account can be closed. The IRS provides guidelines to help identify businesses that may need a new EIN. In general, according to the IRS, businesses will need a new EIN when the ownership or structure has changed but not in the case of a simple name change. Ownership and structural changes include, but are not limited to, declaring bankruptcy, a trust changing into an estate and a change in the entity s ownership. You might also need to apply for a new tax ID for business operations from your state, as well. Using an EIN for any reason other than in connection with business activities is illegal. An EIN should not be used in place of a Social Security number, but some credit repair firms advise that a new credit identity can be established by using an EIN when applying for personal credit. This scheme is called file segregation, and the Federal Trade Commission warns that violators could face fines or even a prison sentence.

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