New regulations would not be in effect for this filing season, but would eventually require paid tax preparers to meet continuing education requirements, pass competency tests and register with the government. Preparers would also have to adhere to ethical standards.

The new guidelines, which do not affect certified public accountants, attorneys or other enrolled agents, are designed to reduce fraud and errors on tax returns.

"The IRS believes there's an enormous tax gap -- either people are not reporting the appropriate amount of income or people are just not reporting income," said Thomas Taricani, a partner in Boyer & Ritter Certified Public Accountants and Consultants. "One of the ways the IRS addressed this over the past several years is putting more responsibility back on preparers. The IRS perceives if they can get enough preparers on a common level of knowledge and understanding through registration, they can more aggressively attack this tax gap."

About 80 percent of Americans use a tax preparer. The U.S. Treasury estimates that $345 billion in taxes is not collected annually and 82 percent of this is underreporting of income by individuals.

Currently, anyone may prepare a federal tax return for anyone else and charge a fee, the IRS said. While some preparers are currently licensed by their states or enrolled to practice before the IRS, many do not have to meet any government or professionally mandated competency requirements before preparing a federal tax return for a fee.

Taricani said the new regulations are a step forward, but he is worried they may also create some confusion.

"One of our concerns is that there's a perception that by registering preparers, they're saying everyone is akin to a CPA. There's a perception that just because you're registered, you're no different than a CPA," Taricani said.

"So I think it's a positive step, but there's a part of me that says pushing some of the audit process away from the government and back into the hands of preparers is not the way to go. It's not a step back, but it's not as positive a step forward as they could have had," Taricani said.

In Pennsylvania, certified public accountants are regulated by the Department of State board of accountancy. Pennsylvania Revenue spokeswoman Stephanie Weyant said. General tax preparers do not have to register with the Department of State.

CPAs are also required to complete 80 hours of continuing education classes per biennial period in Pennsylvania. The 80 hours must include eight credit hours in tax subjects.

Brad Kearns, a tax partner with Smith Elliott Kearns & Co., a regional accounting firm, said he believes extending continuing education requirements to all tax preparers would be a good idea.

He said his firm requires 120 hours of continuing education every three yeas for CPAs.

Joe Schellhase, coordinator of the local AARP Tax Aide program, said it doesn't appear the proposed changes will affect his tax counselors because of the program's own certification standards.

The proposed regulations will not take effect for this filing season, but last week the IRS began sending out letters to about 10,000 paid tax return preparers nationwide. These preparers are among those with large volumes of specific tax returns where the IRS typically sees frequent errors.

Thousands will also receive visits from IRS agents.

The IRS said finding a reputable tax preparer is particularly crucial because taxpayers are legally responsible for what is on their tax returns, even if the return is prepared by someone else.

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Marcus Rauhut can be reached at mrauhut@publicopinionnews.com or 262-4752.

Proposed regulations

- Registering with the IRS and obtaining a preparer tax identification number. These preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid;

- Requiring competency tests for all paid tax return preparers except attorneys, certified public accountants and enrolled agents who are active and in good standing with their respective licensing agencies;

- Requiring ongoing continuing professional education for all paid tax return preparers except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements;

- Extending the ethical rules to all paid preparers that currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct.

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