TAX FEATURE As part of the Return Preparer Program, tax preparers are to register and obtain a Preparer Tax Identification Number (PTIN). To date the IRS has issued approximately 740,000 PTINs. Also included in enforcement activity will be letters sent to preparers whose returns have had questionable traits on schedules A, C and E as well as highly questionable Earned Income Tax Credit claims. Over 20,000 letters were sent to preparers in October and over 2,500 visits will occur during the coming filing season. The visits will be made to preparers that have been picked due to an assessment of higher risk. IRS agents have been instructed to show flexibility in scheduling these visits. The most flexibility should be shown to year-round tax preparers as opposed to seasonal preparers. If practitioners experience problems they should notify AICPA Leadership. The Criminal Investigation Division will also be looking at preparers where fraud and other illegal activities are suspected. Their investigations may include “undercover shopping visits.” Farris Fink with the Small Business/Self Employed Division discussed several items of interest including the fresh start initiative in the collections area. The criteria for the streamlined offer in compromise program have changed. The income limit has been increased to less than $100,000, up from $50,000,
and the balance due must be less than $50,000. These offers will be worked in a central site. In addition, the IRS employee will be allowed to talk to the taxpayer/POA rather than having to do all information gathering by correspondence. Fink also relayed that there are changes in some of the lien programs. One example is that liens may now be “withdrawn” rather than just “satisfied” if paid in full. The taxpayer must request the withdrawal and it must be in the best interest of the taxpayer and the government. In addition, under certain circumstances, the lien may be withdrawn if the taxpayer owes less than $25,000 and enters into a direct debit installment agreement. In the compliance/exam area Fink shared the ongoing dialogue concerning the use of accounting software in audits. Due to input from the AICPA and state societies, there have been some changes and some potential problems resolved. The compliance area will continue to focus on abusive transaction promoters, bad preparers, and return line item schemes. Some of the schemes that are currently being focused on include shareholder basis, inflated expenses, false information reporting documents and inflated schedule A deductions. Another focus area is high income/ high wealth taxpayers. The IRS will be using enterprise audits when looking at these taxpayers and may examine the individual return as well as the related activities including partnerships and S-Corporations that are on the taxpayer’s return. Fink reminded us of the Voluntary Classification Settlement Program, which addresses the problem of employees that have been incorrectly
AICPA Tax Resources The AICPA has a number of resources available for use during tax season including talking points, print advertisements, social media and tax tweets and educational booklets. Visit the Career/Marketing Toolkit section of the AICPA website at www.aicpa.org classified as independent contractors. There has been a lot of interest in this program and the IRS hopes that in return for the less exposure the taxpayer has coming in to the program that there will be an increase in compliance going forward. Another area that Commissioner Shulman addressed is the IRS’ desire to move towards a “real time tax system.” Under a “real time tax system,” information returns would be loaded into the system quickly. This information would then be used in the filtering process of looking at a return on the front end to determine if the IRS should accept the return. Taxpayers would have the opportunity to resolve problems on the front end rather than facing an audit several years later. The advantages of this type system would be increased compliance, increased service to the taxpayer, decreased burden to the taxpayer, and issues resolved in a more timely manner. n
Charles M. Ayers, CPA, is manager with McDowell-Pearman, LLC in Columbia. He currently serves as chairman of SCACPA’s Taxation Committee and previously served on the Information Technology Committee.
AICPA National Tax Conference (888) 557-4814 | www.scacpa.org
South Carolina CPA Report
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