Most Tax Preparers file all tax returns for their clients electronically through the IRS efile system.  efile is preferred by most taxpayers because it is faster and more secure than US mail or other options, it provides confirmation of IRS receipt of the tax return, plus refunds are accelerated and can be direct deposited into the taxpayer’s bank account.  IRS is considering making efiling mandatory for all tax preparers.  To participate in IRS efile, which we highly recommend, you must become an Electronic Return Originator (ERO) and obtain an Electronic Filing Identification Number (EFIN) for your tax office location (which may be your home).  The IRS video at the link below provides additional information.

How to become an Authorized IRS e-file Provider

http://www.youtube.com/watch?v=MnZgjpVGZDw

The IRS has announced new rules to regulate tax preparers.  There will be two tests, one for preparers of individual returns and one for preparers of individual and business returns. I expect the testing will be outsourced, as is the EA exam. IRS says it is sensitive to the ability of lower volume tax preparers to pay and will keep fees affordable. I think this is going to be great for reputable independent tax preparers and firms. The elimination of incompetent and unethical tax preparers should enable reputable preparers to increase market share. We will also be in a better position to compete with high-priced CPA firms because we will now also have designations as IRS-authorized preparers. This is a good development.

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I think IRS nationwide regulation of tax preparers should be positive for qualified tax professionals, and is long overdue. Concerns might include the cost of regulation, which IRS may want to pass on to preparers through fees. However, we should be adequately represented to address such concerns by tax professional associations such as NATP, NSA and NSTP. IRS regulation should help to eliminate “fly-by-night” tax preparers who are not qualified to prepare tax returns accurately and professionally. These preparers have been taking market share from qualified tax preparers, while not incurring the same costs. Regulation should create a standard for tax preparer qualifications and help to level the playing field.

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