IRS To Fingerprint Tax Preparers

IRS To Fingerprint Tax Preparers

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Yes, you read that correctly.

The Journal of Accountancy reports that the IRS plans to start fingerprinting thousands of tax preparers as part of its oversight program and run the fingerprints through an FBI database:

The IRS released more details on its tax preparer oversight program on Wednesday, and said registered tax return preparers would now be required to renew their Preparer Tax Identification Numbers on an annual basis. In addition, the 15-hour continuing education requirement will take effect next year.

Certain tax return preparers who must pass a suitability check will have to provide their fingerprints so that a Federal Bureau of Investigation database search can be conducted. Generally, the fingerprint requirement will affect those preparers who currently have provisional PTINs.

Under the current proposed regulations, any participant in the PTIN, acceptance agent, or authorized e-file provider programs who resides and is employed outside of the U.S. will not have to be fingerprinted to participate in these programs.

Those preparers, however, must comply with all the other elements of the suitability check. In addition, the Treasury Department and the IRS are continuing to study which additional requirements should apply to people  outside the U.S. Any additional requirements will be set forth in future guidance.

Attorneys,  CPAs, enrolled agents, enrolled retirement plan agent and enrolled actuaries also are expected to be exempt from the fingerprinting requirement at this time. However, they are still required to answer all the suitability questions on the PTIN application, such as whether they have been convicted of a felony in the previous 10 years.

Individuals participating in the PTIN, acceptance agent, or authorized e-file provider programs also are required to meet any other requirements of the programs in which they are participating.

Up until now I have been a strong supporter of IRS licensing and regulation of unenrolled tax preparers. But that was before I knew how far these power-dizzy bureaucrats would take it.

Fingerprinting people goes too far.

These invasive rules are bound to trickle down to already-licensed and regulated preparers: The CPAs, the tax attorneys and the IRS Enrolled Agents.

It looks like Joe Kristan was right. Preparer regulation is more about power and control than it is about protecting the public from unscrupulous tax preparers.

Give a government agency a centimeter and it takes a kilometer.

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida

Comments

  1. Peter-

    I left the same comment at Joe Kristan’s blog, but weren’t you required to submit fingerprints before becoming a lawyer?

  2. Brian,

    I don’t remember, but I probably did because I know they did a criminal background check.

    I am not sure the IRS fingerprinting tax preparers is the same thing, though.

    But good point.

  3. People who work at Wall Street Firms (even in relatively mundane clerical jobs) need to get a fingerprint check, even if they are not brokers dealers and never see a customer.

    I wonder if this was driven by preparers stealing money from the government/customers with bogus returns/refunds.

  4. Madrian,

    They are employees. That’s different than the government making citizens give them their fingerprints.

  5. Peter, the IRS enables professional taxpreparers to efile returns on behalf of third parties (i.e., their customers) on a massive scale.

    A typical full-time preparer might efile returns effectively instructing the IRS to wire millions of dollars from the US Treasury into a variety of bank accounts during the course of a tax season.

    Due to the complexity of tax laws, there is a vulnerable public forced to share their confidential and sensitive financial data (SSNs, bank account numbers, income and asset figures) with their preparer.

    Criminal record checks and fingerprint checks for preparers seem like a good idea to me.

  6. Fingerprinting is getting ubiquitous these days. My mother (in her late 70s) was required to be fingerprinted to teach Sunday school classes as a volunteer at her church.

    Furthermore, in this day and age of easy electronic identity theft, data such as fingerprints and retina scans may ultimately be needed just to authenticate the identity of the person you think you are dealing with.

  7. Also, Peter, the fingerprinting requirement Madrian cited for people who work at Wall Street firms is not merely a requirement imposed by employers on employees.

    It is a requirement imposed by the government on citizens who want to work in the securities industry, whether as brokers, dealers, traders, or employees thereof.

    See here:

    http://taft.law.uc.edu/CCL/34ActRls/rule17f-2.html

    It is quite analogous to the fingerprinting requirement the IRS is proposing for tax preparers.

    Basically, whether you are in the securities business or whether you are a tax preparer, you are in a position where you have access to a lot of financial data relating to other people’s money, and you have a great deal of power to misappropriate other people’s funds by misusing that data.

    There is a public interest in excluding people with felonious criminal records from working in those kinds of positions of trust.

  8. Mary,

    Anyone who is permitted by law to handle other peoples money should have a background check. Tax preparers do not fit into that category.

  9. Dan Alban says:

    I am admitted to practice law in both Virginia and DC and I don’t believe either bar required fingerprinting.