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Written by: Joshua Fluegel

Published: 08 February 2012

Attracting new clients must always be in the forefront of a tax professional’s thoughts. Gone are the days of placing an ad in the newspaper a couple of months before tax season and seeing a steady inflow of new clients as a result. To attract clients online the tax professional must be online as well. The checklist below offers some helpful hints that will help your website receive more traffic and keep your tax practice flourishing:

Evaluate Your Existing Site

_____ What are the successes and failures of your existing site? Gather a few people to get an honest evaluation of your existing site.

_____ Write three successes and three failures.

_____ Then write down your dreams and goals for the new site.

Does It Grab Your Attention?

_____ Do you think visitors remember your site?

_____ Does it have something that gets attention and is memorable?

_____ If he/she does not bookmark your site, what will get them back?

You should give your visitor something to remember so that he can find his way back to your site. Write one thing that will be remembered about your site.

Target Audience

_____ Who is the target audience?

_____ Decide whom you want to target with the site.

_____ Who is your customer or audience? Try and get into their shoes and think like they think. What are their needs or points of interest? How can they be served?

_____ List the top three categories of people. Write three one-sentence descriptions of different people in your target audience. Then write a few words that might interest these people and cause them to respond to your site.

Theme and ‘Look and Feel’

_____ What is the mood or emotion that you want to communicate?

_____ Decide on the overall theme and "look and feel" of the site. For example: humor, professional, academic, family or technical.

_____ Write three adjectives to describe the way you want your site to feel. _____ _____ _____

Trust and Credibility

_____ What will make your visitor believe you? Imagine going into an automobile repair shop. What is it that gives you a sense of trust that your car will be repaired correctly? A quality site that does what it says it is going to do will help. Well-written content also adds credibility. Testimonies by reputable people or companies are perhaps the best way to establish creditability.

Analyze Popular Pages

_____ Look at your site statistics and carefully examine the popularity of the pages. You may need to redesign the site so that the pages that you want visited are the most popular. There will always be pages at the bottom of the list but your goal should be to make sure that the important pages are not at the bottom.

Analyze Visitors’ Actions

_____ Are your visitors coming back and are they spending time at your site? If your visitors are not returning or they are only spending a few seconds at your site then something is wrong. A good site statistics program or service will help you know what your visitors are doing.

Fresh News

_____ Do your visitors feel they are visiting an active site? Visiting a site that was last updated in 1996 is a sure way to lose visitor trust. When redesigning the website build in ways to keep it fresh, but keep in mind that publishing dates can work against you. You don’t want to be worrying about updating a website in the middle of tax season.

Search Engine Optimization

_____ Search engine optimization (SEO) is the process of improving the volume and quality of traffic to a Web site from search engines via "natural" ("organic" or "algorithmic") search results. Typically, the higher a site's "page rank" (i.e, the earlier it comes in the search results list), the more visitors it will receive from the search engine. SEO can also target different kinds of search, including image search, local search, and industry-specific vertical search engines.

As an Internet marketing strategy, SEO considers how search engines work and what people search for. Optimizing a Web site primarily involves editing its content and HTML coding to both increase its relevance to specific keywords and to remove barriers to the indexing activities of search engines.

Details

Written by: Joshua Fluegel

Published: 10 January 2012

The IRS recently issued new rules for ethical standards for tax professionals in regard to positions taken on a tax return. 

These provisions reside in §10.34 of the Circular 230 regulations that govern ethical standards and discipline for tax practitioners before the IRS. The provisions are separate and apart from similar (and overlapping) rules under IRC Code §6694, which relate to penalties that may be imposed on return preparers under the Internal Revenue Code.

Essentially, there are three courses of conduct that may get a preparer in trouble under the new Circular 230 rules. The same items apply to persons signing a return or claim for refund and persons advising taxpayers on adopting a return position:

a. If the position lacks a reasonable basis;

b. If it is an unreasonable position under Code §6694(a)(2) (relating to the Code penalties on tax preparers); or

c. If the position is a willful attempt to understate liability or is a reckless or intentional disregard of rules and regulations.

Note that it is possible that the position have a reasonable basis, with a violation still occurring. This is because under Code §6694(a)(2), a reasonable basis will not protect a practitioner against penalties for certain tax shelter and listed transaction standards, nor for positions that lack “substantial authority” if required disclosure rules are not complied with.

However, the preamble to the new rules does provide that a violation of Code §6694(a)(2) is not a per se or automatic violation of Circular 230. An independent determination as to whether the practitioner engaged in willful, reckless or grossly incompetent conduct will be made before such a violation is found.

T.D. 9527, IRS Final Regs. Governing Practice Before the Internal Revenue Service (May 31, 2011)

The chart below provides an overview of the various categories of individuals who are governed by Circular 230.

 

 

* Enrolled Agents have passed a three-part, comprehensive IRS exam covering individual and business returns. They must adhere to ethical standards and complete 72

hours of continuing education courses every three years. EAs have unlimited practice rights before the IRS, which means they can represent clients for any tax matter.

** RTRPs have passed an IRS test establishing minimal competency. The test covers only individual income tax returns (Form 1040). They must adhere to ethical

standards. They must also complete 15 hours of continuing education each year. RTRPs have limited practice rights before the IRS, which means they can represent

clients in only certain circumstances.

*** CPAs and Attorneys have unlimited practice rights before the IRS.

† Do not sign tax returns but are employed by firms at least 80% owned by attorneys, CPAs or EAs.

‡ Only prepare 1040-PR and 1040-SS and may not identify themselves as registered tax return preparers.

Details

Written by: CPA Magazine

Published: 10 January 2012

Tax preparers are required to pass a competency test in order to achieve the title of Registered Tax Return Preparer. The goal of the IRS is to administer a test that is founded on basic preparer competency. As such, the Registered Tax Return Preparer (RTRP) test will focus on the ethical responsibilities of federal tax return preparers and the completion of Form 1040 series along with the basic related schedules and forms. The test specifications provided here (revised August 11, 2011) are intended to provide guidance on the content of the RTRP test. The examples are not all inclusive of what may be tested in a given area.

This outline lists topic that could be included in the test. Not every topic on the list will necessarily appear on the test, and the list should not be viewed as all-inclusive. However, this list is based on the results of a job analysis survey sent to more than 700,000 tax return preparers who identified the basic knowledge needed for tasks performed by minimally competent Registered Tax Return Preparers.

Domain 1: Preliminary Work and Collection of Taxpayer Data

1.  Review prior year’s return for accuracy, comparison, and carryovers for current year return.

2.  Collect taxpayer’s biographical information (e.g., date of birth, age, marital status, citizenship.

3.  Determine filing status.

4.  Determine all sources of taxable and non-taxable income (e.g., wages, interest, business, sale of property, dividends, rental income, income from flow-through entities, alimony, government payments, and pension distributions).

5.  Determine applicable adjustments to gross income (e.g., self-employed health insurance, self employment tax, student loan interest deduction, alimony paid, tuition, and fees deduction).

6.  Determine standard deduction and Schedule A itemized deductions (i.e., state and local tax, real estate tax, cash contributions, noncash contributions, unreimbursed employee expense, medical expense, and mortgage interest).

7.  Determine applicable credits (e.g., earned income tax credit, child tax credit, education, retirement savings, dependent and child care credit). 8.  Understand tax payments (e.g., withholding, estimated payments).

9.  Recognize items that will affect future returns (e.g., carryovers, depreciation).

10.  Determine special filing requirements (e.g., presidentially declared disaster areas).

11.  Determine filing requirements (including extensions and amended returns).

12.  Understand due dates, including extensions.

13.  Determine personal exemptions, including dependents.

14.  Determine qualifying child/relative tests for Earned Income Credit.

Domain 2: Treatment of Income and Assets

Income

1.  Taxability of wages, salaries, tips, and other earnings (e.g., W-2 Wage and Tax Statement, cash).

2.  Interest Income (taxable and nontaxable) (e.g., Schedule B and 1099-INT).

3.  Dividend Income (e.g., Schedule B and 1099-DIV).

4.  Self-employment income and expenses (e.g., Schedule C Profit or Loss From Business and Form 1099-MISC Miscellaneous Income, cash).

5.  Rental income and expenses (e.g., Schedule E Supplemental Income and Loss).

6.  Identification of forgiveness of debt as income (including Form 1099-C Cancellation of Debt).

7.  Other income (e.g., alimony, barter income, hobby income, non taxable combat pay, state income tax refund from prior years, prizes).

Retirement Income

1.  Reporting requirements of Social Security benefits (e.g., Form SSA-1099 Social Security Benefit Statement).

2.  Taxable distribution from an IRA including basis in an IRA (e.g., Form 8606 Non-deductible IRAs).

3.  Distributions from qualified plans (e.g., 401k, IRA, Roth IRA).

4.  Required minimum distributions from retirement plans.

Property, Real and Personal

1.  Short-term and long-term capital gains and losses (e.g., Schedule D Capital Gains and Losses, Form 1099-B Proceeds From Broker and Barter Exchange Transactions).

2.  Determination of basis of assets (e.g., purchased, gifted, or inherited).

3.  Sale of non-business assets (gains or losses).

4.  Sale of a principal residence (e.g.,IRC 121 exclusions, 1099S Proceeds From Real Estate Transactions).

Adjustments to Income

1.  Self-employment tax (e.g., Schedule SE Self-Employment Tax).

2.  Tuition and fees – (e.g., Form 8917 Tuition and Fees Deduction, Form 1098T Tuition Statement).

3. Eligible Moving expenses – (e.g., Form 3903 Moving Expenses).

4. Other adjustments to income (e.g., IRA contribution deduction).

Domain 3: Deductions and Credits

Itemized deductions

1. Medical and dental expenses.

2. State, local, and real estate taxes.

3. Mortgage interest expense (e.g., Form 1098 Mortgage Interest Statement).

4. Charitable contributions (e.g., cash, non-cash, Form 8283 Non-Cash Charitable Contributions).

5. Miscellaneous itemized deductions (including deductions subject to 2% AGI Limit).

6. Employee travel, transportation, education, and entertainment expenses (e.g., Form 2106-EZ and Form 2106 Unreimbursed Employee Business Expenses).

Credits

1. Child and dependent care credit (e.g., Form 2441 Child and Dependent Care Expenses).

2. Child Tax Credit and Additional Child Tax Credit (e.g., Form 8812, Additional Child Tax Credit).

3. Education credits (e.g., Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits), Form 1098T Tuition Statement).

4. Earned Income Tax Credit (EITC) (e.g., Schedule EIC Earned Income Credit, Form 8867 Paid Preparer’s Earned Income Credit Checklist).

5. Retirement savings contribution credit (e.g., Form 8880 Credit for Qualified Retirement Savings Contributions).

Domain 4: Other Taxes

1. Alternative Minimum Tax (e.g., Form 6251 Alternative Minimum Tax).

2. Early distributions from retirement plans (e.g., Form 5329 Additional Tax on Qualified Plans).

3. Self-employment tax (e.g., Schedule SE Self-Employment Tax).

4. Unreported Social Security and Medicare tax (e.g., Form 4137 Social Security and Medicare Tax on Unreported Tip Income).

5. Repayment of first-time homebuyer credit (including Form 5405 First- Time Homebuyer Credit and Repayment of the Credit).

Domain 5: Completion of the Filing Process

1. Check return for completeness and accuracy.

2. Explain and review tax return.

3. Explain record-keeping requirements to the taxpayer.

4. Discuss significance of signatures (e.g., joint and several liability, penalty of perjury, Form 8879 IRS e-file Signature Authorization).

5. Understand tax preparer’s responsibilities related to rejected electronic returns.

6. Understand timeframe for submitting electronic returns (e.g., Form 8879 taxpayer signature and date prior to submission).

7. Understand payment options (e.g., check, direct debit, EFTPS, credit card, installment agreement-Form 9465).

8. Understand estimated tax payment requirements (e.g., potential for penalties, Form 1040-ES Estimated Tax).

9. Understand refund options (e.g., Form 8888 Allocation of Refund).

Domain 6: Practices and Procedures

1. Penalties to be assessed by the IRS against a preparer for negligent or intentional disregard of rules and regulations, and for a willful understatement of liability (e.g., IRC 6694(a), IRC 6694(b)).

2. Appropriate use of Form 8867 Paid Preparer’s Earned Income Credit Checklist and related penalty for failure to exercise due diligence (e.g., IRC 6695(g)).

3. Furnishing a copy of a return to a taxpayer (e.g., IRC 6695(a)).

4. Signing returns and furnishing identifying (PTIN) numbers (e.g., IRC 6695(b), IRC 6695(c)).

5. Rules for the return preparer for keeping copies and/or lists of returns prepared (e.g., IRC 6695(d)).

6. Compliance with e-file procedures (e.g., timing of taxpayer signature, timing of filing, recordkeeping, prohibited filing with pay stub).

7. Completion and use of Form 2848 Power of Attorney and Declaration of Representative and Form 8821 Tax Information Authorization.

8. Safeguarding taxpayer information (e.g., Publication 4600 Safeguarding Taxpayer Information, Quick Reference Guide for Business, IRC 7216).

Domain 7: Ethics

Circular 230 Subparts A, B, and C (excluding D, E), but not limited to the following:

1. Preparer’s due diligence for accuracy of representations made to clients and IRS; reliance on third-party work products.

2. What constitutes practice before the IRS and categories of individuals who may practice.

3. Limits on practice by a registered tax return preparer.

4. Requirement to furnish information to IRS upon request.

5. Prompt disposition of matters before the IRS.

6. Prohibition on receiving assistance from or providing assistance to disciplined practitioners.

7. Rules regarding fees, including contingent fees.

8. Rules in dealing with clients, including return of client records, conflicts of interest, advising on omissions and errors, solicitation (including advertising), and negotiation of taxpayer refund checks.

9. Due diligence standards with respect to tax returns and other documents; standards for signing, advising positions on returns and advising submissions of other documents; advising on penalties; good faith reliance on client information; reasonable inquiries regarding incomplete, inconsistent, incorrect information.

10. Responsibility of individual(s) who have principal authority over a firm’s tax practices.

11. Incompetence and disreputable conduct that can result in disciplinary proceedings.

12. Sanctions that may be imposed under Circular 230.

Details

Written by: CPA Magazine

Published: 10 January 2012

The Registered Tax Return Preparer competency test contains 120 questions, 100 scored questions and 20 experimental questions in multiple-choice and true or false format. You will have 2.5 hours to complete the test. The 20 experimental questions will not be scored. They are distributed throughout the test and will not be identified as such. These are used to gather statistical information on the questions before they are added to subsequent tests. The subject content list is based on the results of a job analysis survey sent to more than 700,000 tax return preparers who identified the basic knowledge needed for tasks performed by minimally competent Registered Tax Return Preparers.

-  Tests are administered via computer at Prometric test centers. Test centers are located in most major metropolitan areas.

-  You must pay a fee each time you schedule an appointment to take the test. The fee is paid at the time of scheduling, not at the test center by MasterCard, Visa or American Express. Testing fees are not refundable or transferable.

-  If you do not pass the test, you must schedule another test appointment and pay another test fee. There is currently no limit to the number of times you may take the test.

-  You may take the test at any time during the year except during the annual black-out period from April 1 — April 15, when the system is updated.

-  Rescheduling a test appointment must be done online through your PTIN account at www.irs.gov/ptin or by calling 855.IRS.EXAM. You cannot reschedule an appointment by fax, e-mail or voicemail. If you miss your appointment or arrive late and are not allowed to test, your entire fee will be forfeited and you must pay another fee to schedule a new test appointment.

-  To reschedule a test appointment for another date, time or location, you must contact Prometric. There is no fee if you reschedule 30 calendar days prior to your appointment date. There is a $35 fee if you reschedule five to 29 calendar days before your appointment date. Another full test fee if you reschedule less than five calendar days before your appointment date. If English is your second language, please note that a language barrier is not considered a disability.

Test center procedures

Your test will be administered via computer at a Prometric test center. You do not need any computer experience or typing skills to take your test. Before you start the test, you will receive a personalized introduction to the testing system. You can also take a pre-test computer system tutorial if you wish. You may wish to view the video, “What to Expect on Test Day” prior to your testing appointment by visiting www. irs.gov/ptin. You should arrive at the test center at least 30 minutes before your scheduled appointment.

Identification required:  You must present a valid, non-expired form of identification before you can test. That identification document must be government-issued (e.g., driver’s license, passport, state-issued identification card or military identification card); and have a name that exactly matches the name used to register for the test.

Failure to provide appropriate identification at the time of testing is considered a missed appointment. As a result, you forfeit your test fee and must reschedule your appointment.

Reference materials:  During the test, you will have access to Publication 17 Tax Guide for Individuals, Form 1040, and Form 1040 Instructions. Electronic reference materials will be provided as exhibits for candidates to use while taking the computer-based test. You are not allowed to bring your own reference materials to the test center. Due to the time limit of the test, it is recommended that you research the reference materials only when necessary.

Calculator usage:  You will be able to use an onscreen calculator and will also be provided a handheld calculator that is silent. You are not allowed to bring your own calculator to the test center.

Scratch paper :  You will be provided with a packet of scratch paper and a pencil. You may not bring your own scratch paper or pencil to the test. The test center administrator will collect all scratch paper upon completion of the test.

Ten important test center regulations not previously mentioned include:

-  You will be continuously monitored by video, physical walkthroughs and the observation window during your test.

-  You are required to sign out on the test center roster each time you leave the test room. You must also sign back in and show your identification to the test center administrator in order to be re-admitted.

-  You are prohibited from communicating, publishing, reproducing, or transmitting any part of your test, in any form or by any means, verbal, written, or electronic, for any purpose.

-  You must not talk to other candidates or refer to their screens, testing materials, or written notes.

-  You are allowed to bring soft ear plugs or center-supplied noise-blocking head phones.

-  Any clothing or jewelry items allowed to be worn must remain on your person at all times .

-  You must not bring any personal/unauthorized items. You will be asked to turn your pockets inside out prior to every entry into the test room.

-  You will be scanned with a metal detector wand prior to every entry into the test room. If you refuse, you cannot test.

-  You are not allowed to use any electronic devices or phones during breaks.

-  Your test has no scheduled breaks. If you take an unscheduled break, the test timer will continue to count down.

Question types

The questions in your test are mostly multiple-choice, with some true or false questions. Three different multiple-choice formats are used, each of which provides four options from which you choose your answer. Examples of each multiple-choice format, as well as a true or false example, are shown below.

Direct question

An individual taxpayer’s return consists of Form 1040 and Schedule C. Without an extension, what is the normal due date of the return?

A. March 15

B. October 15

C. April 15

D. June 15

Incomplete sentence

Federal income tax overpayment amounts applied from the prior year’s return

A. cannot be claimed on Form 1040EZ.

B. do not need to be reported on the tax return.

C. are reported as excess Social Security withheld.

D. are reported as part of Federal income tax withholding on the current year return.

“All of the following” except

All of the following are factors in determining if a U.S. citizen or resident taxpayer must file an income tax return EXCEPT the taxpayer’s:

A. gross income

B. filing status

C. location of earning

D. age

True or False item

The client provided the preparer with receipts for the prior year’s business expenses. The client has requested that the preparer return those receipts because the client is now under audit. The preparer refuses to turn over the receipts. The preparer is in violation of Circular 230.

A. True

B. False