GAO REPORTS ON PAID TAX PREPARERS AND REFUNDABLE CREDITS:

The GAO is issuing a new report related to Refundable Tax Credits and Paid Preparers. The report, Paid Tax Return Preparers: IRS Efforts to Oversee Refundable Credits Help Protect Taxpayers but Additional Actions and Authority are Needed, reviews an IRS program aimed at educating paid preparers who submit returns with errors related to refundable tax credits. Fewer errors benefit taxpayers, paid preparers, and IRS. The report can be found here: GAO-23-105217

It is estimated, by the IRS, that $26 billion in refundable tax credits were for the wrong amount or missing documentation in FY 2021. Millions of taxpayers claimed these credits and about half used a paid preparer to complete their returns.

The IRS does not have the authority to establish professional requirements for all paid tax preparers, so it created a program to educate preparers who submit returns with tax credit errors. IRS's program aims to improve the accuracy of tax returns, but it can only reach a small fraction of paid preparers.

In the past the IRS has identified a need for an IRS-wide tax return preparer strategy that would ensure consistent treatment of all preparers across different compliance programs. However, progress on the IRS-wide strategy stalled. Thus, how the Refundable Credits Return Preparer Strategy program fits into a broader service-wide strategy remains unclear. The IRS received significant additional funding as part of the Inflation Reduction Act of 2022 but officials noted that the strategy cannot be finalized until the IRS-wide reorganization is completed The agency is developing a detailed spend plan for these funds.