Episode 10: Tax Preparers Gone Wild! Treasury Report Highlights Need for the IRS to Do More About Bad Apple Preparers and More

In this episode, Jerrod Oltmann and I discuss tax preparers gone wild or tax preparers who either fail to file a return themselves or help their clients to avoid paying their taxes. 

In our first segment, we discuss the Treasury Inspector General's report regarding the IRS failure to clamp down on tax preparers who don't file or pay their taxes. While not as egregious as the amount due from high-income non-filers, tax preparers who fail to file or pay their own taxes or who help their clients avoid paying their correct tax are a very real problem. 

In our second segment, we discuss what warning signs you should look for when hiring a tax preparer. Many people are not aware that even if your tax preparer is bad, you are still on the hook for any unpaid taxes, interest and penalties. So it pays to know how you can tell whether or not you are dealing with an honest preparer

Finally, we discuss how the IRS is using the club of penalties to compel tax preparers to "audit" their clients. With the increase in fraudulent claims of refundable tax credits, the IRS has foisted additional due diligence requirements on tax preparers. Jerrod and I go through the different levels of due diligence and discuss some things tax preparers should look for to avoid trouble from the IRS.

Here is a link to the TIGTA's report we discussed in our first segment at: https://www.treasury.gov/tigta/auditreports/2020reports/202030027fr.pdf

In our second segment, we talked about avoiding bad apple tax preparers. You can read the IRS notice on what questions you should ask your preparer to avoid trouble down the road: https://www.irs.gov/newsroom/irs-choose-tax-preparers-carefully-tax-return-preparer-fraud-makes-irs-2019-dirty-dozen-list-of-tax-scams

In our final segment, we discussed tax preparer due diligence and there are too many helpful links to post. I recommend starting here at the IRS EITC Central area. There is a great wealth of information on how the IRS expects preparers to handle the expanded due diligence. EITC Central From there, I recommend clicking on the tax preparer toolkit tab at the top (link here) where most of the important information is housed. I will admit the pages are not super well organized and you will end up going down many rabbit holes but it is worth it if you don't know what to put in place to avoid trouble with the IRS.

As always, I'd like to thank Jerrod Oltmann, enrolled agent, for his help is producing this podcast episode. Jerrod is another tax professional who helps people tackle their IRS tax problem. You can read more about Jerrod's on his bio page at: https://www.jpoea.com/about/ 

If you or someone you know has a tax problem, call our office at 207-502-7181 or email us at jwade@jdwadelaw.com. We will be glad to help you. Otherwise, please enjoy our content and let us know if there are topics you'd like us to discuss.