Friday, January 15, 2010

IRS to Regulate Tax Prep in 2011

I copied this from my Auctiva account. More ways big daddy government will watch and tax you. I put in bold print a few sentences of importance and in italics are my comments.

IRS to Regulate Tax Prep in 2011
The move dovetails with a new requirement to report online income.

by staff writer - Jan 06, 2010

After conducting several studies to determine whether tax preparers were doing people's taxes properly, the IRS announced Monday it will begin regulating tax preparation next year to ensure taxpayers get adequate service—and don't lose money in fines or overpayments.

Changes will begin in the 2011 tax year. Those who want to prepare taxes for others come tax season will have to pay the IRS a registration fee, pass a competency test and spend at least 15 hours a year learning the latest on tax law. Currently, few states monitor tax preparation and there are no federal requirements to be a tax preparer.

Officials called out the tendency of some preparers to exclude "other income" from their clients' tax returns. That issue will be partially addressed starting this year. Electronic-payment processors such as PayPal and credit card companies will have to report merchant sales if they surpass $20,000 a year, or if a seller receives more than 200 payments in a year. (don't be fooled, its $20,000 now, once they get their hands on it they will lower it each year until even a dollar made will be taxed)

The lack of regulation may be costing taxpayers money every year, as recent studies show. In 2006, Government Accountability Office employees visited 19 tax-prep businesses to get their taxes done. All 19 businesses made mistakes on income-tax returns, and only two "arrived at the correct bottom line," according to reports. In a 2008 test, 17 out of 28 of those tested made mistakes. Officials also said many of the complaints the IRS received in 2008 concerned fines taxpayers were responsible for because of mistakes by tax preparers. So instead of going to a flat tax, a fair tax, or lowering and simplifying they will come up with more rules and regulations and complicate the system even more.

"In most states you need a license to cut someone's hair," IRS Commissioner Douglas Shulman says. "Most tax-returns preparers don't have to meet any standards when they sit down and prepare federal tax return for an American taxpayer."

Major tax-prep chains H&R Block and Jackson Hewitt say they support the new regulations, and that their companies' requirements surpass what the federal government will impose. Of course they support it, more money for them. Taxing is big business at the expense of the average person.

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