Tax Preparation Office – Compliance Testing and Training
In the wake of our nation’s most troubling economic downturn since the Great Depression, regulatory committees, corporations, and small businesses alike have begun waves of compliance testing aimed at providing financial oversight and some measure of protection against the liability of their transactions. Of particular interest are the new measures taken by the IRS and the big corporate banks that deal with providing income tax refunds and their related services.
Knowing the potential for financial instability inherent in any series of large-scale transactions, particularly the now nearly extinct Repayment Anticipation Loan market, financial regulators are seeking to reduce the effects of this latest challenge to our country’s financial woes by introducing sweeping reforms. in the practices of income tax preparers. In previous years, the vast majority of income tax preparers were not held to professional standards, nor were they required to have any level of documented proficiency in income tax preparation.
Those days are now gone. While a preparer may choose to run a tax business without following the standards set by the IRS and banking institutions, doing so is a disservice to their clients and the integrity of the industry as a whole, while also putting the office at risk. of legal actions. and unnecessary responsibility.
Compliance training and testing, while overwhelming or even intrusive to some, is a “necessary evil” for working in today’s tax preparation industry. Not only is it intended to protect you against the depredations of those taxpayers who attempt to fraudulently rig the system, but it also adds an air of legitimacy to your business by allowing you to meet the highest professional standards available.
Training and compliance testing have two main purposes. The first and most important is to reduce your liability for the information provided by your customers.
Imagine, if you will, an audited taxpayer who claims they put fraudulent information on their tax return, or that they were never allowed to file their return in the first place. Such a scenario can be prevented by simply following the compliance guidelines provided by the IRS. At a minimum, following the guidelines allows you to separate yourself from the information and content of the returns you prepare. After all, you get paid to enter the information your customers enter.
Second, compliance training and testing provide insight into an institution’s procedures and the steps they take in their financial process, along with an explanation or understanding of why. For example, most bank compliance tests involve a highly interactive test-and-learn process that provides the preparer with a wealth of information about exactly how the bank conducts its business of providing taxpayers with their money. This is helpful in that you can be prepared to knowledgeably answer your customers’ questions, as well as understand what to expect should a problem arise.
In essence, following compliance guidelines not only confers professional responsibility and legitimacy on your business, but also protects you from many scenarios where you actually risk losing your ability to provide specific banking services, or even being permanently exclude you from income tax preparation services entirely. The IRS and banks take their new set of mandates on tax preparation and banking product services very seriously, and just following compliance guidelines, often as simple as keeping copies of certain documents, signature pages, and identification , you can save yourself and your tax practice from a world of trouble.
