New tax rules take effect
Tax season is under way.
But in light of new rules taking effect this tax season, some residents could be forced to look for new tax preparers.
Internal Revenue Service guidelines mandate more stringent identification of who tax preparers are, making it more difficult for just anyone to file a tax return.
Required preparer identification number
All tax preparers, even those who are certified public accountants or enrolled agents, must sign up and pay for a personal tax identification numbers (PTINs) if they prepare tax returns after Dec. 31, 2010. The annual PTINs cost preparers $64.25.
According to the North Carolina Society of Tax Professionals, about 60 percent of American households rely on a tax preparer to compile and file taxes.
"Getting a new industry-wide registration system in place is essential to our efforts to improve the standards and oversight of tax-return preparation," said IRS commissioner Doug Shulman. "These efforts are essential to the future of the nation's tax system. This will create higher standards for the tax preparation community and ensure quality service for taxpayers."
Claremont-based accountant Ronald McGee agreed.
He said the new registration system helps people know that the accountants they pay to file tax returns are trustworthy and knowledgeable in the accounting field.
"I wouldn't try to be my own lawyer," McGee said. "And I'm definitely not a mechanic."
New e-file mandate
Starting Jan. 1, many tax preparers were required to file tax returns electronically. Those who prepare 100 or more individual trust or returns in 2011 are required to e-file. Those who prepare 11 or more 1040 returns, or individual income tax returns, in 2012 will be required to e-file.
Expansion of ethics standards
Tax preparers must comply with the Treasury Department's standards of conduct starting Jan. 1. Attorneys, CPAs and enrolled agents will continue to be authorized for tax preparation.
The IRS will verify if tax-return preparers are compliant with ethics obligations through the new PTIN requirements.
For Claremont residents Roscoe and Sharon Church, the ethics and training requirements are a good way for taxpayers to know their taxes are filed properly.
They tried filing their taxes without the help of a professional, but they said it became too much.
"Stick with a professional," Roscoe said. "We found that out."
Future stipulations, which haven't been implemented, require tax preparers to take a competency test to officially become a preparer.
Attorneys, CPAs and enrolled agents are exempt from competency testing.
McGee, who has been an accountant for more than 30 years, said ethics and other education training is necessary to understand the changing field of tax preparation and filing.
Although future requirements mandate tax preparers participate in 15 hours of continuing education a year, many preparers, like McGee, choose to participate in classes voluntarily.
"It's a matter of pride, and it's a matter of professionalism," McGee said.
Not everyone, however, can afford to pay someone else to do their taxes.
That's why volunteers from the American Association of Retired Persons offer nationwide tax counseling and e-file services free of charge for seniors and low-income families.
In Catawba County, the free services start Feb. 1 and continue through April 15 at the Main Library in Newton on Tuesdays, the Patrick Beaver Memorial Library in Hickory on Thursdays and the West Hickory Senior Center on Fridays.
Appointments are required. Call (828) 291-7982 between 10 a.m. and 2 p.m. to schedule an appointment at either library. Call (828) 328-2269 to set up an appointment at the West Hickory Senior Center during center hours.
According to the AARP, the Tax-Aide service has been helping the elderly and low- to moderate-income families since 1968.
With new rules added to already complex tax guidelines, it's not uncommon for taxpayers and even tax preparers to have questions during the filing process.
The important thing to remember, McGee said, is not to wait until the last minute to ask those questions.
"I get calls constantly," he said. "There's a lot of questions from people. If you're in doubt, don't listen to your neighbors."
Representatives from the IRS are available for people who have questions about filing their tax returns. McGee advised getting the representative's name, rank and badge number during the conversation, so if a problem arises in the future, there's no question who offered the assistance.