Registered Tax Return Preparer Work Presents Delicate Conflict

Taxpayers may obtain representation before the IRS by a registered tax return preparer concerning returns the RTRP prepared. The Declaration of Taxpayer Rights states that individuals have this right for a professional to represent them in IRS matters. Unfortunately, IRS authority also governs every RTRP practice.

This presents a subtle balancing act for tax preparers. The IRS can sanction any professional with a tax preparer license. That presents some reservation in how aggressive an RTRP defends a taxpayer. The tax professional must possess complete assurance that deducted expenses are legitimate. Otherwise, the IRS is likely to sanction a tax preparer who submits client information without substantiation.

The IRS Office of Professional Responsibility is the department charged with administering activities in the tax preparation business. OPR has a staff of 58 employees. They investigate complaints about the conduct of tax practitioners. Several punishments are available for OPR to implement. Any tax preparer that violates provisions in Circular 230 is subject to these penalties.

According to the OPR, the most common acts bringing official reprisal upon tax professionals are providing false or misleading information, advice about filing false returns, rendering false or incompetent opinions, failure to inform clients about their own omissions as taxpayers, and unreasonable delays.

As tax preparer requirements to maintain certification are gradually implemented, the OPR expects to focus future investigations on tax compliance matters. This emphasis ranges from stopping tax scam operations to assuring that due diligence mandates are followed. Tax practitioners are required to conduct reasonable inquiries into the validity of information provided by clients. The fate of tax preparer careers rests upon OPR defining of reasonable conduct standards.

OPR can issue a private reprimand letter to any tax professional regarding an alleged violation of Circular 230. When OPR does not expect that such a letter will rectify the tax preparer's behavior, a public censure is issued. These letters are available through the Internal Revenue Bulletin.

More severe violations result in temporary suspension or permanent disbarment from the tax preparation industry. The term of a suspension can range from a few months to five years. Disbarment is normally used to achieve more than basic punishment. It serves to alleviate the harm that a tax professional is perpetuating upon the community or the IRS.

A final avenue available to OPR is monetary penalties. These are imposed upon tax practitioners who intentionally engage in misconduct.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Fast Forward Academy is a leading publisher of education for registered tax return preparer and tax professionals. Access to free questions for the RTRP practice is available on their website.