Establishing your Tax Preparation Business : Innovative Overtax Preparer Legislation

Nervous entrepreneurs seeking to start a tax preparation business may now breathe a sigh of relief; the IRS has finally released the fee structure related to the brand new mandated tax preparer registration. The sum total fee for this is $64.25 per individual for the first year of registration. $50 with this fee covers the IRS’costs for administering the brand new PTIN program, and $14.25 visits a third-party vendor to operate the internet system and provide customer support. In the years ahead using this first year’s registration or re-registration process, preparers is going to be required to renew their PTINs annually and pay the $14.25 user fee every year for this renewal process.

All folks who intend to preparer tax returns this season will have to either register. New preparers will have to get a PTIN (Preparer Tax Identification Number) and experienced preparers, who have a PTIN, is going to be required to re-register their existing PTIN. There are many aspects of this new requirement that effects tax business owners.

• Increased cost of operation

• This relates to the general cost of maintaining employees for the tax practice taxfyle. As your tax business grows, inevitably capacity issues will dictate that you bring in more tax preparers. Which means you will most likely need to foot the bill for his or her registration and renewals.

• If preparers leave your tax business and choose to go benefit a competitor’s firm, their PTIN complements them. Even if you pay for their registration, you the tax business owner have no ownership of the preparer’s PTIN.

• Increased difficulty of staffing

• There would have been a suitability test for a PTIN to be issues to a tax preparer. This test carries a criminal background check and tax compliance check. Which means if your new employee features a criminal felony history or if they have not filed their personal taxes before they may not be approved to be a registered tax return preparer. This will inevitably narrow the field of potential candidates for employees.

• You will not be able to hire a fresh tax preparer on the fly or mid tax season and immediately put them to work preparing return. You must feel the registration process first.

The big new effect that many tax business owners are referring to could be the dismissal of the old preparer adage “I recently imputed what the tax payer told me.” Given that tax return preparers will fall underneath the supervision of and be at the mercy of disciplinary actions by the Office of Professional Responsibility, preparers are held accountable for submitting returns with frivolous tax positions.

For Example: if your taxpayer approaches your business and wishes to claim their family dog as a dependent, and knowingly your tax preparer goes along with this; there may be disciplinary actions taken at the tax preparer level, not only at the taxpayer level as was the case in the past. As a tax business owner or someone considering starting a tax preparation business, you ought to be aware of the most recent IRS regulations affecting your business and your employees.


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