IRS RESPONSE TO RECOMMENDATION: 

The IRS is committed to launching an external communication campaign to educate taxpayers on choosing reputable preparers, including the value and benefits of credentialed preparers and the Annual Filing Season Program participants by the end of the 2024 fiscal year.

This is in addition to our ongoing efforts to educate both taxpayers and preparers on the benefits of the Enrolled Agent and the Annual Filing Season Programs, including outreach to preparers through the Nationwide Tax Forums. In addition, the Return Preparer Office is partnering with Wage & Investment to educate taxpayers through the Tax Preparer Awareness Week and Who Can I Trust campaigns.

RPO also assists taxpayers in finding credentialed preparers through the Preparer Directory (https://irs.treasury.gov/rpo/rpo.jsf). Preparers opt-in to be included in this public directory which allows taxpayers to locate credentialed preparers based on both location and type of credential. RPO will promote the Preparer Directory in all educational campaigns that provide guidance to taxpayers on choosing a reputable tax return preparer. RPO will collaborate with IRS Online Services to feature the Directory on relevant pages, leading up to and during the tax filing season. RPO will utilize social media to share informative posts about the Preparer Directory, its benefits, and how taxpayers can access it.

CORRECTIVE ACTION: RPO will collaborate with IRS Online Services to feature the Directory on relevant pages, leading up to and during the tax filing season. RPO will utilize social media to share informative posts about the Preparer Directory, its benefits, and how taxpayers can access it.

TAS RESPONSE: IRS outreach to taxpayers about how to find a reputable return preparer was noticeably comprehensive leading up to and during the 2024 filing season. The IRS’s communications provided useful information to taxpayers about how to find credentialed return preparers, how to identify red flags, and how to report bad return preparers. The IRS is also approaching this issue from another angle by encouraging professionals to become credentialed. We look forward to reading the IRS’s communications leading up to the 2025 filing season.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): Ongoing

IRS RESPONSE TO RECOMMENDATION: ​The IRS will continue to explore ways to increase publicity for the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. Specifically, Stakeholder Partnerships, Education and Communication (SPEC) will continue to collaborate with non-profit organizations to promote the availability of the VITA and TCE programs. SPEC uses internal communication channels to inform all IRS employees about VITA/TCE services and the opportunities to volunteer within the program. SPEC also works with W&I Communications to share outreach messages to provide awareness of the VITA and TCE programs and volunteer recruitment. SPEC is currently developing a strategy to increase awareness around the availability of the grant program, including providing a learning session at the 2024 National Tax Forums. Additionally, in 2019, SPEC established six Growth Territories to concentrate on new partner growth opportunities. For FY 2024, SPEC awarded $51M ($40M VITA and $11M TCE) grant funds to support these programs. A budget request for FY 2025 was submitted to the Office of Management and Budget to increase VITA funding from $40M to $55M, an increase of $15M.

CORRECTIVE ACTION: Stakeholder Partnerships, Education and Communication (SPEC) will continue to collaborate with non-profit organizations to promote the availability of the VITA and TCE programs.

TAS RESPONSE: The IRS has prioritized both internal and external communications about the availability of VITA and TCE programs. Such publicity is crucial to inform eligible taxpayers about these important free tax return preparation and filing resources. To support adequate staffing at partner sites, the IRS has provided extensive outreach to IRS staff and the professional community about opportunities to volunteer in these programs. In addition, SPEC’s efforts to raise awareness of the grant program and the request for increased funding to support growth opportunities will benefit eligible taxpayers around the country in need of this important free tax return preparation and filing program.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): Ongoing

IRS RESPONSE TO RECOMMENDATION:The IRS already applies return preparer penalties appropriately to promote voluntary compliance with our tax laws. We’ve significantly increased the rate at which § 6695(c) penalties are manually assessed by establishing a return preparer penalty working group dedicated to addressing preparers who are failing to properly identify themselves or not using a valid PTIN. We will continue to vigorously enforce return preparer penalties where appropriate. We cannot currently systemically assess a penalty on a preparer where there is no identification number, correct identification number, or valid identification number for the preparer included on the return, whereas a manual assessment allows us to confirm that the appropriate preparer is subject to penalty. Under privacy and disclosure laws, the IRS is generally unable to inform taxpayers that their preparer has been assessed a civil penalty; the IRS may publicize civil enforcement actions if the Department of Justice obtains an injunction against the preparer in court and will do so if consistent with the court order.

CORRECTIVE ACTION: We will continue to vigorously enforce return preparer penalties where appropriate. Under privacy and disclosure laws, the IRS is generally unable to inform taxpayers that their preparer has been assessed a civil penalty; the IRS may publicize civil enforcement actions if the Department of Justice obtains an injunction against the preparer in court and will do so if consistent with the court order.

TAS RESPONSE: The IRS has taken a necessary step by establishing the Return Preparer Penalty Working Group in SB/SE. Prioritizing the enforcement of return preparer penalties, especially IRC § 6695(c) penalties, should effectively send a message to the return preparer community that the IRS is taking action against return preparer noncompliance. It is crucial that this message reaches the ghost preparer community to protect taxpayers from the harm this particular population of return preparers imposes.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: The IRS relies on coordination among the relevant functions to achieve its goals with respect to return preparer oversight, including improving preparer accuracy and increasing compliance, identifying non-compliance while also reducing opportunities for preparer misconduct, coordinating educational and compliance actions, and ensuring appropriate outreach to the industry. The IRS engages in continual, sustained efforts such as educational visits to return preparers before, during, and after filing season; appropriate post-filing compliance treatments such as warning letters and preparer audits, or even criminal investigations and injunctions when necessary; and communications and awareness campaigns to reach return preparers and the taxpayers who hire them. Additionally, the IRS is proposing expanded and increased penalties for unscrupulous preparers and is accelerating an existing research effort aimed at detecting and ensuring compliance of ghost preparers. As our return preparer activities grow and evolve, we continue to assess and evaluate novel and robust ways to address incompetent and unscrupulous return preparers, including exploring centralization within the IRS of responsibilities for return preparers.

CORRECTIVE ACTION: N/A

TAS RESPONSE: The various return preparer oversight activities listed by the IRS are commendable. However, spreading return preparer service and enforcement activities across the IRS provides each function only a small piece of the puzzle with no one single function having comprehensive authority. Considering the significant role return preparers play in the tax system, we encourage the IRS to provide one function the authority to coordinate all return preparer activities IRS-wide. One cohesive management structure would allow the IRS to better collect and analyze relevant data, identify trends, and better coordinate resources for return preparer service and enforcement.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A