TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

IRS on April 10 cautioned taxpayers to avoid the dangers of working with so-called "ghost" tax return preparers.  As described by the agency, a ghost preparer is retained to prepare a return for a fee but does not sign the document as the paid preparer . "These phantom preparers who won't put their name on the tax return are a warning sign for taxpayers of a potential scam ", IRS said. Ghost preparers follow several patterns. In one method, they will print the paper return and instruct their client to sign and mail it to IRS. The second method is to prepare an electronically-filed return but they will not digitally sign them as the paid preparer. "By doing so, the tax return appears to be self-prepared, with no indication that a paid tax preparer was used in completing the tax return - helping keep the return preparer under the radar", IRS said. The agency stressed that anyone who preparers or assists in preparing federal tax returns for compensat...

Talk about beating a dead horse!  Yes, that is the IRS position before the courts as to why it can regulate and control tax return preparers.  The district court properly struck down the IRS attempt to control tax preparers as being outside its authority under law.  Congress has never authorized the IRS to control tax return preparers, and frankly it is a truly bad idea.  Why should the IRS be permitted to regulate and control tax return preparers that are supposed to represent taxpayers who are truly adversarial to the IRS? In an attempt to show that they have authority to regulate tax return preparers, the IRS argued before the appellate courts yesterday that a law from the 1880s concerning the regulation of representatives of the people who lost their horses horses when they were killed by the government gives every government agency the right to regulate and control any paid person that has anything to do with the agency.  That would include tax return pre...

New PIN Requirement for 2009 Filing Season Starting with the 2009 filing season, all 1040 taxpayers filing electronic returns must sign their returns using an electronic personal identification number (PIN). A taxpayer's electronic signature will include a five-digit PIN that they create and either their prior year adjusted gross income (AGI) or prior year PIN .

WASHINGTON, D.C. - The United States has filed civil injunction suits against five corporations that operate Jackson Hewitt tax preparation franchises, as well as 24 individuals who manage or work at the franchises, the Justice Department and the Internal Revenue Service (IRS) announced April 2, 2007. According to the four lawsuits—filed in federal courts in Chicago, Atlanta, Detroit and Raleigh, N.C.—the corporations operate under franchise agreements with Jackson Hewitt Tax Services Inc. of Parsippany, N.J., the nation’s second largest tax preparation firm. The suits allege that one of the individual defendants, Farrukh Sohail of Atlanta, Ga., wholly or partly owns each of the five corporations, which prepared and filed over 105,000 federal income tax returns last year. The five corporations allegedly operate more than 125 Jackson Hewitt retail tax preparation stores in the Chicago, Atlanta, Detroit and Raleigh-Durham, N.C. areas. According to the government complaint, Sohail and oth...