The Internal Revenue Service is going after tax return preparers who prepared returns in 2011 but failed to comply with the new federal tax preparer registration program.

Last year, the IRS initiated the Preparer Tax Identification Registration program to oversee the tax return preparation industry and regulate the conduct of tax return preparers. The program requires all paid tax return preparers to obtain a Preparer Tax Identification Number (PTIN). Preparers will be required to sign their names and include their PTINS on the returns and refund claims they prepare.

Earlier this month, the IRS began sending letters to approximately 100,000 income tax return preparers who failed to comply with the new IRS mandate.  The IRS notices explain the program, how to register for, or renew a PTIN, and where to get assistance.

“The vast majority of federal tax return preparers complied with the rules. Obviously, some preparers did not get the word, so these letters provide additional information so they can register as soon as possible,” said IRS Commissioner Doug Shulman. “We owe it to the compliant tax preparers to make sure that everyone is on a level playing field.”

Since last fall, over 700,000 tax preparers have registered and obtained PTINs. Paid preparers who are not tax attorneys, Certified Public Accountants or Enrolled Agents are required to pass a competency exam and suitability check, and complete  15 hours of continuing education credits annually.

Some unscrupulous preparers may attempt to elude the new oversight program by not signing returns they prepare. Taxpayers should never use tax return preparers who refuse to sign returns and enter PTINs.

In an effort to identify these “ghost preparers,” the IRS later this year also will send letters to taxpayers who appear to have had assistance with their returns but lack tax return preparer signatures. The letter will inform taxpayers how to file a complaint against preparers who failed to sign returns and explain how to choose legitimate tax preparers. The goal of the letters is to protect taxpayers by ensuring that all paid federal tax return preparers are registered with the IRS, and sign tax returns they prepare and use an identifying number when required to do so.

Compliance is a central part of the new tax return preparer initiative and the letters are one step in an ongoing compliance effort to ensure tax return preparers are following the new regulations. The IRS also is working to identify tax return preparers who make repeated errors and IRS personnel have had face-to-face meetings with thousands of these tax return preparers over the past two years.

The IRS and taxpayers who use paid tax preparers will benefit from this initiative. Visit the IRS website for more info on the PTINs program.

source: irs.gov

The IRS is offering free tax help to taxpayers this weekend. On Saturday, March 26, 2011, nearly 100 IRS offices will be open to help taxpayers resolve tax issues. The location of participating offices is listed on IRS.gov.

“We are opening our doors this Saturday to help taxpayers who may not have a chance to seek assistance during the work week,” said IRS Commissioner Doug Shulman. ” We are very focused on providing services to taxpayers when they want it, where they want it.”

The IRS Saturday Open House hours are from 9 a.m. to 2 p.m. local time. IRS personnel will be on-site to provide taxpayers one-on-one tax help. More than 35,000 taxpayers attended similar events last year resolving more than 95 percent of their tax issues.

IRS personnel will provide free tax help to taxpayers by helping with tax return preparation, answering tax questions, offering tax tips and assisting in tax issue resolution.

In addition to IRS help, community organizations partner with the IRS. Volunteer Income Tax Assistance (VITA) programs assist people who earned $49,000 or less, and Tax Counseling for the Elderly (TCE) programs assist individuals age 60 and over with their 2010 income tax return preparation and electronic filing. Many of these sites have Saturday hours while others offer assistance at various times during the week. Taxpayers can call 800-906-9887 to locate partner sites in their area.

The IRS Saturday Open House is a great opportunity to get IRS tax help, tax tips and answers to your tax questions - for free.

Make note, the IRS expects to open on two additional Saturdays later this year.

source: irs.gov

The IRS tax laws can be extremely complex even to a tax expert, never mind the average taxpayer. When it comes to determining if income is taxable or non-taxable, you may want to leave it up to your tax preparer or accountant. Here are some tax tips that may provide anwers to tax questions related to income.

Most income is considerable taxable but there are exceptions. In fact, there are certain types of income that is either partially taxed or not taxed at all. Here are some tax tips from the IRS to help taxpayers understand about taxable and non-taxable income.

The following items are examples of items that are NOT taxable:

• Adoption Expense Reimbursements for qualifying expenses
• Child support payments
• Gifts, bequests and inheritances
• Workers’ compensation benefits
• Meals and Lodging for the convenience of your employer
• Compensatory Damages awarded for physical injury or physical sickness
• Welfare Benefits
• Cash Rebates from a dealer or manufacturer

Some income may be taxable under certain circumstances, but not taxable in other situations. Examples of items that may or may not be included in your taxable income are:

• Life Insurance If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Life insurance proceeds, which were paid to you because of the insured person’s death, are not taxable unless the policy was turned over to you for a price.
• Scholarship or Fellowship Grant If you are a candidate for a degree, you can exclude amounts you receive as a qualified scholarship or fellowship. Amounts used for room and board do not qualify.
• Non-cash Income Taxable income may be in a form other than cash. One example of this is bartering,which is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included as income on Form 1040 of both parties.
• All other items—including income such as wages, salaries, tips and unemployment compensation — are fully taxable and must be included in your income unless it is specifically excluded by law.

These examples are not all-inclusive. For more information, see Publication 525, Taxable and Nontaxable Income, which can be obtained by visiting the IRS website or by calling the IRS at 800-TAX-FORM (800-829-3676). The website also provides a wealth of tax tips, tax help and even get you answers to your tax questions.

source: irs.gov