California Tax Education Council

Stronger Enforcement Aims for Stronger Compliance

Tax preparers can expect to see heightened enforcement efforts this tax season.

The Franchise Tax Board (FTB) and IRS enforcement teams will be visiting offices to make sure tax preparers and their employees are following the rules.

In California, anyone caught preparing or assisting with preparing tax returns for a fee without a legal designation (Attorney, CPA, CTEC-registered tax preparer or enrolled agent) will be issued a $2,500 penalty letter from FTB.

Noncompliant tax preparers have 90 days to register with CTEC before the penalty is enforced. If they don’t comply after the $2,500 penalty is enforced and continue to file tax returns illegally, the penalty increases to $5,000.

During the 2010/2011 enforcement cycle, FTB contacted 749 tax preparers statewide. Of those…

• 54% registered with CTEC
• 21% were either exempt or stopped preparing returns
• 12% were issued a $2,500 penalty
• 13% need follow up

The IRS also plans to verify tax preparers are compliant and have a valid Preparer Tax Identification Number (PTIN).

In 2010, the IRS Office of Professional Responsibility reported that it received 796 cases of noncompliance. So far 161 tax preparers have been suspended, 280 were reprimanded, 245 offices were close, six were disbarred and 11 have been reinstated.

To find out more about who is required to register with CTEC, visit https://www.ftb.ca.gov/professionals/registered_tax_preparers.shtml

For details on the new IRS tax preparer regulations, visit www.irs.gov/taxpros.

Tweet

Comments

No comments have been submitted.