IRS requiring tax preparers to register before filing returns


The Internal Revenue Service is asking an estimated 10,000 income tax preparers in Nevada, as well as their peers around the country, to register prior to submitting any returns next year.

The IRS said the registration requirement is the start of a program to upgrade the competence and ethics of tax preparers who compile data for 60 percent of all tax returns.

Las Vegas has long been a hotbed of income tax protesters and fraud, but some in the tax preparation business welcome the IRS registration program.

"My opinion is that it will eventually clean up the industry, at least to some extent, and lead to higher quality tax preparers," said Tom Bingham of Bingham Tax Consultants.

Bingham, who has accounting and economics degrees from the University of Nevada, Las Vegas, will be required to pass a test and take annual continuing-education courses. He doesn't expect that to be a problem and said he already participates in annual courses on changes in tax laws and rules.

Certified public accountants, tax attorneys and enrolled agents will be required to register, but they already must meet testing and educational requirements. So they will not need to take additional courses, David Williams, head of the new Return Preparer Office at the IRS, said in a conference call Wednesday.

Williams said many tax preparers are honest and competent, but others are not.

Over the years, questionable tax preparers in Las Vegas have made national headlines. Tax rebel Irwin Schiff was serving a 151-month prison sentence for tax-related charges when a federal judge in 2008 tacked on another 11 months in prison for disrupting his 2006 trial. Schiff wrote books on how to evade taxes.

The Justice Department in 2004 accused the National Audit Defense Network of persuading tens of thousands of individuals to avoid paying more than $324 million in taxes. The group sold bogus websites, home-based businesses and incorporation packages for income tax evasion, according to the government.

Network co-founder Robert Bennington committed suicide after the charges were filed.

Elizabeth Campos, co-owner and operator of tax preparation business Servi-Mex, was sentenced to one year in prison in September for 33 counts related to the preparation of false tax returns.

Williams, however, focuses on the civil side of enforcement.

"Our goal is to get a better handle on who is doing return preparations in the country and how they are doing it," Williams said.

Tax preparers will be required to register with the IRS before filing any tax returns for clients in 2011. The government is charging $64.25 for registration and will use the money to operate the program.

Preparers can be fined $50 for filing a return without registration, up to a maximum of $25,000 in one year.

The IRS will not penalize individual taxpayers who rely on unregistered tax preparers, but it may send notices to individuals that their preparer was unregistered, Williams said.

Contact reporter John G. Edwards at jedwards @reviewjournal.com or 702-383-0420.

 

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