By Anne Rosivach
A review of the Return Preparer Visitation Project (RPVP) for FY 2011 by the Treasury Inspector General for Tax Administration (TIGTA) found that major changes need to be made to the management of the program to improve its effectiveness. Revenue agents completed approximately 2,500 field visits to selected paid preparers between January 1 and April 30, 2011.
TIGTA stated that it had initiated its review "because the IRS included objectives in its Strategic Plan for Fiscal Years (FY) 2009-2013 to strengthen partnerships with tax practitioners and ensure that paid preparers and other third parties adhere to professional standards and follow the law. The overall objective of the review was to evaluate the effectiveness of the IRS's efforts to conduct visitations to paid preparers to improve the accuracy and quality of filed tax returns."
As part of their review, TIGTA conducted a survey of paid preparers who were visited by revenue agents during FY 2010. The survey showed that that while the tax return preparers reported a positive response to the visits, 70 percent said they would not change the way they prepared returns as a result of the visits.
TIGTA concluded that "The IRS needs to demonstrate positive results to justify the continued use of resources to support the RPVPs."
The IRS selected return preparers for visits in 2010 and 2011 using the Risk Assessment Scoring Tool, which identifies preparers who prepared returns with schedules on which the IRS typically sees errors. The schedules include Form 1040, U.S. Individual Income Tax Return; Schedule A (Form 1040) Itemized Deductions; Schedule C (Form 1040) Profit or Loss From Business; or Schedule E (Form 1040), Supplemental Income and Loss.
Both the Taxpayer Advocate and the AICPA had recommended in 2011 that return preparers who received error notices should be selected for the educational visits. Selection based on the completion of certain schedules would not necessarily improve the quality of tax return preparation.
Although the IRS added some enhanced filters in 2011 to the Risk Assessment Scoring Tool, he TIGTA determined that no enhancements were made to identify paid preparers who filed "abusive" or egregious tax returns. Insufficient enhancements were made to the selection methodology for FY 2012, the report states.
TIGTA states that "without making changes to its methodology to select paid preparers with a history of preparing problematic returns, the IRS cannot ensure the results from the RPVP will help it meet its strategic goals."
TIGTA also found that RPVP lacked performance measures, tracking procedures, or a quality review process to successfully evaluate the effectiveness of these projects.
TIGTA recommended that the IRS specifically:
- Use data-driven methods to identify tax return preparers who filed returns with errors.
- The Director, Return Preparer Office should also develop specific performance measures and internal controls that can be used to assess the impact of the program on the return preparer community. This effort should include a process to monitor and track the behavior of paid preparers visited to determine whether the quality and accuracy of returns improved.
The IRS has agreed with both recommendations and stated that it had already begun implementation.
- IRS Continues to Check Up on Tax Return Preparers
- AICPA Supports Number ID and Circular 230 Standards for All Tax Return Preparers