Growls

The Treasury Inspector General for Tax Administration (TIGTA) completed an audit last month (requires Adobe) in order “to monitor and evaluate the IRS’s implementation of the e-file mandate for preparers.” (HT Tax Prof Blog)

In short, TIGTA found that more tax return preparers are filing electronically, but better controls are needed so that all preparers are complying with the new regulations for preparers. According to the report’s highlights, TIGTA found (Asterisks indicate redaction):

“The e-file mandate is helping the IRS with its goal to electronically receive 80 percent of individual tax returns by Calendar Year 2012.  More than 79 percent of tax returns were e-filed in Calendar Year 2011 as of June 9, 2011. However, the continued use of multiple preparer identification numbers makes it difficult to match all tax returns to the preparers. The potential risk of Preparer Tax Identification Numbers (PTIN) ****** *******2(f)********* ******** *************2(f)*** also presents significant challenges. Additionally, the IRS is unable to determine **********2(f)********* ******* *******2(f)*************** ******** **********2(f)*********** ******* ******** ********** ***2(f)*********** ********* ********.

“For the first few years, the IRS plans to use a “soft” approach to enforcement with emphasis on educating and collaborating with preparers in implementing e-file requirements. However, improvements are underway to ensure controls and system validations over the preparer registration process are effective.”

TIGTA also found that prisoners registered for and obtained PTINs. As a result, TIGTA reported that:

“Current regulations do not prohibit prisoners from registering and obtaining PTINs.

• 962 PTIN applicants on the IRS’s Prisoner File with an incarceration date within the last 10 years received active or provisional PTINs – 745 (77 percent) of the 962 applicants did not disclose the felony conviction.
• 331 active or provisional PTIN holders were in prison when they received their PTINs.
• 43 PTIN applicants are serving life sentences and received active/provisional PTINs. None of the 43 disclosed the felony conviction on the PTIN applications. Eleven (26 percent) of the 43 indicated they had a qualifying professional certification and they received active PTINs; 32 (74 percent) received provisional PTINs.

“The IRS has decided that prisoners will not be issued PTINs and those who were issued PTINs will have them suspended.  The IRS stated that it is actively working on solutions for suspending PTINs of prisoners and preventing future PTIN applicants who are prisoners from receiving a PTIN. ************************************2(f)****************** ***********. ******2(f)*************."

So when seeking help on preparation of your tax return, be sure of your trust in the preparer.