According to a report released by the Treasury Inspector General for Tax Administration (TIGTA), IRS could improve its selection of problematic paid preparers for further enforcement actions.
TIGTA reported that, as the majority of individual taxpayers pay someone to prepare their tax returns – nearly 60 percent of all individual taxpayers in 2013 – paid preparers’ impact on tax compliance can be significant. A troublesome few have intentionally manipulated tax return information to generate excessive refunds for taxpayers, modified tax returns after the taxpayers signed them to steal the refunds, or used taxpayer identities to create fictitious returns to generate fraudulent refunds.
TIGTA found that the Return Preparer Office (RRCs), who are the key control to ensure that the IRS’s Examination function implements its part of the agency’s Return Preparer Strategy, effectively managed most of the paid preparer activities under their control and provided good audit leads for further enforcement actions.
TIGTA suggested that more actions could be taken to ensure that the RRCs timely review referrals with allegations of inappropriate paid preparer behavior, and that the referrals and complaints are shared among the various functions responsible for reviewing them.
TIGTA recommended that the agency should develop and implement inventory controls and timeliness standards for the referral process to help ensure that problematic paid preparers are identified and considered for further enforcement actions.
