As of 9/18/2012 there are 18,676 registered tax preparers, and 327,438 who have not yet passed the Tax preparer test. Considering tax season, less than a year left. Man, I am aiming to open two locations Dec 2013!
"Although Block has said no, won't other offices be able to get by without everyone passing? It seems that they can still have tax pros work 'under supervision' and have the official person review and sign the return." (david4801)
Only firms owned by CPA's or EA's can have someone prepare a return (or part of a return) and have someone else review it and sign it (CPA or EA). This won't work for Block, Hewitt, Liberty or non-CPA/EA mom and pop shops. Having an EA work for a company and review/sign returns also won't work. The ownership of the company is what determines if they can use this "loophole". At least that's the way I understand it.
Today's paper wrote an article about tax cheats in Italy, men who drive Ferrari's that pay no tax, and the lost of 53 billion a year. I think we lost that much just on the EIC, first time home buyers credit, and "under the table" wages paid out. While I'm aware the entire tax system is based on people's honesty to report their income, it's mostly only the W2 wage that has strict control, with costly penalties for employers that are so much as one day late in their daily, monthly or quarterly payments. How can IRS prove how much rent a landlord received? How can IRS prove some one didn't inherit stock? Who's going to challenge the self employed, who slip money into their pocket and by pass the register? The list is long, the audits few. While I'm betting the vast majority of us are honest, IRS still reports billions of dollars in fraud every year. There is NO paper trail on some incomes, and keeping log books on business income is also based on honesty. If one has a business and doesn't log mileage, or keep receipts, they are not suppose to take it, right? Not taking the deduction may get higher EIC, so is it dishonest to be a bad bookkeeper due to ignorance? What will IRS do at an audit, when a taxpayer says he's lost all his receipts, and was scared to write them off since he had no proof?
Preparers are starting to get letters from IRS, about due diligence on EIC. While IRS is saying we can't ask for birth certificates, they know they have a major problem with nieces and nephew who are NOT blood relative, and we are expected to ask more questions when the child's last name doesn't match the taxpayer. WELL, that's so common today with the divorce or never married folks, grilling the crap out of them, won't work, when they're highly aware of how to answer!
Have we created a tax system of such unfairness, we reward cheaters, and punish the honest guy who has to pay the cheater's share? I may not have seen any Ferrari's, but I have written a lot of tax returns for people who own real expensive SUV's and 40K pick up trucks, who end up paying very little in tax, or NONE at all.
Which leads me to answering Patrick's post. Will some tax services find a way to cheat and have one registered pro sign a return, while another does the work? I'm thinking, "how is IRS going to prove it happened?" The rules are for the honest, and NOT all people are when it comes to money. While we are trained for honesty, and have pride in our work, there are those who will find "loopholes" even if they have to invent them!
Don't overlook the fact that current tax pros (that have paid the irs fee) do not have to pass the test this year. They have until next year, after 2013 tax season.
I imagine some have tried the test and failed, so they will wait till next year. Also a bunch are on the fence about staying in the business so are delaying the test till necessary.
Also remember,the IRS makes the rules and changes the rules to suite their perceived need. They will makes sure that there is a orderily 2013 tax season ,or heads will roll.
Question for lead poster. If there is a shortage of Tax preparers, how will you be able to staff and manage two offices?