Many Americans make the very wise choice to seek tax advice at some point in the year, usually once filing season rolls around. However, what they may not know is that there are many rules related to what constitutes tax advice in certain situations, and as such, the Internal Revenue Service is often quite careful in issuing guidance on this front. This week, it made a few changes to the regulations related specifically to written tax advice going forward.
Now, those who would issue such advice to consumers about their annual filings are seeing the standards they have to meet before they are legally allowed to do so change, according to a report from Accounting Today. Consequently, those issuing written tax guidance in particular must make sure the organizations they are representing to consumers have significant procedures in place to comply with Circular 230, a part of the tax code that relates specifically to tax professionals, accountants, and so on, so that they do not end up falling short of consumers' needs.
Moreover, there are more rules in place to force those professionals to demonstrate competence when it comes to the dispensing of tax advice, and when representing those clients to the IRS itself, especially where their services related to the negotiation of the person's returns, the report said. The changes came following a lengthy public comment period, during which time the IRS received 19 pieces of written feedback on the proposed changes.
What's the upshot?
All of this may sound a little complicated, but the general idea behind it is that it could save tax professionals - and, in turn, consumers, if the savings are passed along - significant amounts of money, the report said. In addition, the changes could also reduce their workloads significantly by taking away certain aspects of the work they would have had to do to be compliant under the old rules.
Consumers who are somewhat concerned about their ability to take all the tax advice they receive into account during filing season might want to keep in mind that experts typically recommend that they work with these professionals not only between the start of the new year and the filing deadline, but over the course of the preceding year, to make sure any potential speed bumps aren't overly problematic.
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