Saturday, September 11, 2010

A "PTIN Facebook" for registered tax preparers?

As part of the new preparer registration process, the IRS should make it easy for taxpayers to confirm the identity and PTIN registration credentials of their tax preparers.

Now, I need to be clear.

I am NOT talking about letting Mark Zuckerberg and his minions at Facebook.com maintain the PTIN database. We already know that the public has more confidence in the IRS than in Facebook.

However, in this day and age of social network software, it should be straightforward for whatever company the IRS selects to run the PTIN registration system to host a secure site where registered preparers can upload their photos, so they can be linked to PTIN registration records.

The irs.gov website should provide a link to that website and the IRS should educate taxpayers that it is in their own best interest to verify the identity and registration status of their tax preparers before they give him any confidential tax documents or provide any sensitive financial or personal information.

In other words, when a taxpayer first approaches a potential tax preparer, she should be able to ask for his name and PTIN before she gives him any confidential information. She ought to be able to go to irs.gov and find a link to a webpage where she can type in his PTIN and see his name, photo, and contact information.

Since preparers will be paying $64.25 per year to be registered, it is reasonable for them to expect that the irs.gov website should provide their prospective customers a way to authenticate their identity and registration status.

Legitimately registered preparers have a strong stake in ensuring that other preparers do not "steal" their credentials.

In the past, unscrupulous preparers who wanted to appear as if they were complying with the law could easily copy the name and PTIN of a registered preparer simply by looking at the information on a copy of another client's prior year return.

It is also very easy for government "secret shoppers" to verify that paid preparers are complying with this part of the PTIN regulations. The secret shopper doesn't have to sit around and wait until the preparer finishes the entire return to see if s/he will sign it with a valid PTIN. The "secret shopper" can simply walk into a tax prep shop and ask the preparer to present his or her PTIN credentials before sitting down for an interview and handing over documents.

A "PTIN Facebook" maintained by the company the IRS selects to manage the registration process is an excellent idea.

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