The Return Preparer Program (RPP) is an agency-wide effort to enforce compliance of tax return preparers. Tax return preparers are a critical component of tax administration and provide a unique opportunity to impact taxpayer behavior and compliance with tax laws. The IRS encourages compliance among tax return preparers through a variety of means by providing targeted enforcement activities to identify and address the most egregious return preparers. The Return Preparer Program includes all tax return preparers - not only self-identified return preparers. All business units under the Services and Enforcement Organization have tax return preparer strategies, including the Return Preparer Office (RPO), the Office of Professional Responsibility (OPR), Return Integrity Compliance Services (Taxpayer Services RICS), and Examination.

Authority to administer the Return Preparer Program includes, but is not limited to, the following:

The Director, Examination Headquarters, is the executive responsible for providing policy and guidance for Field employees and ensuring consistent application of policy, procedures, and tax law to effect tax administration while protecting taxpayers’ rights. See IRM 1.1.16.5.5, Examination Headquarters, for additional information.

The Director, Examination Field and Campus Policy, reports to the Director, Examination Headquarters, and is responsible for the delivery of policy and guidance that impacts the Field Examination process. See IRM 1.1.16.5.5.1, Examination Field and Campus Policy, for additional information.

Field Examination Special Processes (FESP), under the Director, Examination Field and Campus Policy, is the group responsible for providing oversight and policy and procedural guidance on specialized examination processes to SB/SE Field examiners and group managers. See IRM 1.1.16.5.5.1.2, Field Exam Special Processes.

Periodic program reviews are conducted by FESP to:

The following table lists acronyms commonly used throughout this IRM and their definitions:

The following table lists commonly used terms and associated definitions referenced throughout this IRM:

The following table lists related resources which contain additional guidance examiners may reference regarding the Return Preparer Program:

The Area RPC gathers information on tax return preparers from various sources. This includes:

The RPC maintains records containing information on return preparer activities. When a pattern of noncompliance is recognized, the IRS will consider action to prohibit the tax return preparer from practicing before the IRS. Preparer action will be limited to cases where information indicates a tax return preparer has engaged in a widespread practice of making material errors. This conduct demonstrates intentional misconduct or clear incompetence in preparing income tax returns.

When submitting information about a noncompliant return preparer, be as specific as possible about noncompliance. Provide as much of the following information as possible:

See IRM 4.11.51.6.1, SB/SE and LB&I Return Preparer Referrals, for submitting referrals regarding noncompliant preparers.

Ghost preparers are preparers who fail to properly identify themselves in accordance with IRC 6109, Identifying numbers. All compensated return preparers must have a PTIN. Ghost preparers are defined as preparers who:

If an examiner encounters a potential ghost preparer issue during an examination, the following should be considered:

The examiner should attempt to obtain as much information about the tax return preparer from the taxpayer as possible in order to support the penalty.

Under Circular 230, Regulations Governing Practice before the Internal Revenue Service, and Treas. Reg. 601.502(b)(5)(iii) (Link: 26 CFR 601.502(b)(5)(iii)), an unenrolled preparer may only represent a taxpayer before Revenue Agents, Customer Service Representatives, or similar officers and employees of the Internal Revenue Service (including the Taxpayer Advocate Service) during an examination of the tax period covered by the tax return they prepared and signed (or prepared if there is no signature space on the form).

The IRS has a voluntary program called the Annual Filing Season Program (AFSP) that recognizes the efforts of non-credentialed return preparers who aspire to a higher level of professionalism. Those who participate can meet the requirements by obtaining a certain number of continuing education hours in preparation for a specific tax year. They must also renew their PTIN for the upcoming year and consent to adhere to the obligations in Treasury Department Circular 230, Subpart B, Section 10.51.

Participation in the AFSP provides unenrolled return preparers with limited representation rights. They are permitted to represent taxpayers before the IRS under Rev. Proc. 2014-42, which supersedes Rev. Proc. 81-38.

According to Rev. Proc. 2014-42, in order for unenrolled return preparers to represent taxpayers for tax returns filed after December 31, 2015, they must:

Examiners can determine if an unenrolled return preparer holds a current AFSP Record of Completion by searching the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications on www.irs.gov (https://irs.treasury.gov/rpo/rpo.jsf).

Examiners can determine if an unenrolled return preparer holds a prior year AFSP Record of Completion by reviewing the Annual Filing Season Program (AFSP) Participants list located on the RPO webpage (https://irssource.web.irs.gov/RPO/Pages/Home.aspx).

When the information compiled by the RPC indicates a pattern of noncompliance with the returns prepared, a PAC may be initiated.

IRS can only identify returns prepared by a particular preparer if the preparer properly identified themselves on the return. Therefore, examiners should request a list of all individual and business returns prepared by the preparer under the authority of IRC 6107, Tax return preparer must furnish copy of return to taxpayer and must retain a copy or list.

The RPC orders a sample of returns from these lists as well as the preparer inventory list (PIL) and reviews them for audit potential. If the RPC determines there is sufficient audit potential in the sample, the RPC will request concurrence from the PSC to initiate a PAC.

Upon concurrence, the RPC will obtain clearance from the LDC (IRM 4.1.10.4.4) and CI (IRM 4.1.10.4.3) to ensure there are no conflicts with an existing preparer or CI investigation.

Upon receipt of LDC and CI clearances, the PSC will submit a program action request memorandum to the Area Director, through the Territory Manager, for approval. If not approved by the Area Director, a PAC will not be initiated and no action will be taken.

If approved, the RPC will establish the cases on AIMS.

IRC 6694, Understatement of taxpayer’s liability by tax return preparer, allows for the assertion of preparer penalties under the following subsections:

Examiners can find information on IRC 6694 in IRM 20.1.6, Preparer, Promoter, Material Advisor Penalties.

A referral to OPR is mandatory when IRC 6694(b) penalties are asserted.

A referral to OPR is discretionary when IRC 6694(a) penalties are asserted and should be discussed with your area RPC.

See IRM 20.1.6.5, IRC 6695 Penalties That May Apply to a Tax Return Preparer, for detailed information regarding IRC 6695 penalties.

IRC 6695 penalties can be asserted in conjunction with IRC 6694 penalties.

All tax return preparers must have a PTIN or other prescribed identifying number that was applied for and received in the manner prescribed by the IRS in Treas. Reg. 1.6109-2(d) (Link: 26 CFR 6109-2(d)) and Notice 2011-6. If the PTIN is not present on the return in question, or is present but not active, the tax return preparer may be subject to a penalty under IRC 6695(c), Failure to furnish identifying number. Examiners should be aware of the following circumstances where a penalty may apply:

Examiners may find more information on preparer penalties at IRM 20.1.6, Penalty Handbook, Preparer and Promoter Penalties.

When appropriate, SB/SE examiners will make a referral to their Area RPC on Form 14719, Small Business/Self Employed (SB/SE) Return Preparer Referral. Form 14719 should be forwarded via e-mail to the Area RPC where the practitioner resides. The e-mail address for your Area RPC can be found on Form 14719.

When appropriate, LB&I examiners will e–mail the LB&I RPC explaining the reason for the referral, including the tax return preparer’s name, address, and identification number, the taxpayer’s name and identification number, and an explanation of the noncompliance identified on the part of the tax return preparer.

Examination employees should also adhere to procedures for making other types of tax return preparer referrals per IRM 4.11.55, Examination Officers Guide (EOG), Power of Attorney Rights and Responsibilities. Examiners may contact their Area’s RPC for guidance on making referrals.

Specialty Tax examiners should consult with their RPC for appropriate referral form and procedures.

SB/SE and LB&I examiners who encounter non-compliant preparers should consult with their manager regarding potential preparer penalties when appropriate. As it is more efficient to address the issue(s) while already engaged with the preparer, examiners should not send referrals to the RPO in lieu of penalty consideration.

The public and IRS non-enforcement employees may send a referral to RPO using Form 14157, Return Preparer Complaint, for suspected misconduct. Based on specific criteria, the RPO will forward the referral to the Exam Area RPC for consideration. Form 14157 has instructions on when to use the form and when to send a referral to RPO.

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OPR supports the IRS strategy to enhance enforcement of the tax law by ensuring that tax professionals adhere to tax practice standards and follow the law. OPR is the governing body responsible for interpreting and applying the Regulations Governing Practice before the Internal Revenue Service (Circular 230).

OPR addresses behavior that is willful, reckless or incompetent. The OPR mission is to educate and reach out to people who practice before the IRS and who are subject to Circular 230. OPR has jurisdiction over practice by attorneys, certified public accountants, enrolled agents, enrolled actuaries and appraisers. OPR does not regulate unenrolled preparers. Any matters of misconduct on the part of an unenrolled preparer should be referred to the local RPC for consideration and resolution.

SB/SE and LB&I employees should send referrals to OPR for disreputable conduct and incompetence involving attorneys, certified public accountants, enrolled agents, enrolled actuaries and appraisers. Examples of misconduct under Circular 230 that may warrant a referral to OPR are found in IRM 4.1.10.8, Referrals to the Office of Professional Responsibility at Preparer Penalty Closure. SB/SE employees may send referrals to OPR after they take Title 26 enforcement actions (preparer penalties). Detailed information on referrals to OPR may be found in IRM 4.1.10.8, Referrals to the Office of Professional Responsibility at Preparer Penalty Closure, and IRM 4.11.55.5.1, Referral to the Office of Professional Responsibility (OPR). Examiners should review IRM 4.1.10.8 and may consult with the Area RPC when making OPR referrals.

Form 8484, Suspected Practitioner Misconduct Report for the Office of Professional Responsibility, is the form used to make a referral to OPR. Managerial approval of Form 8484 is required. OPR will provide guidance and feedback to field/agency sources regarding essential referral criteria for each relevant Circular 230 provision.

A referral to OPR is required when IRC 6694(b) penalties are asserted when there is willful or reckless conduct.

The OPR web site has a searchable database containing the names of all the individuals currently under suspension or disbarment (https://www.irs.gov/tax-professionals/search-for-disciplined-tax-professionals).

Form 14624, Office of Professional Responsibility (OPR) Referral, is used for referrals from OPR to SB/SE and LB&I.

When an examiner receives a Form 14624 referral case from OPR, complete Part V of Form 14624 and return it to OPR within 45 days of receipt.

If the referral is surveyed:

If an examination is conducted:

The SB/SE LDC:

The LDC is responsible for the approval of all SB/SE IRC 6700 and IRC 6701 investigations of promoters/ preparers. The LDC coordinates with CI, Counsel and DOJ to ensure appropriate penalties and/or sanctions are pursued when warranted, and provides field support for ongoing investigations.

The LDC authorizes investigations of potentially abusive tax return preparers as well as promoters of abusive tax schemes. Authorized investigations are assigned to specially trained examiners through the Abusive Transaction Issues Area PSP Coordinator. A definition of abusive transactions can be found in IRM 4.32.2.3, Abusive Transactions Defined.

The public can report suspected promoters of illegal tax schemes or abusive tax return preparers by mailing or faxing a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, as well as any available documentation regarding the promotion or activity to:

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If a tax return preparer fraud referral to CI is considered, contact your local RPC and Fraud Enforcement Advisor to discuss the suspected return preparer fraud.

Some examples of return preparer fraud include:

Referrals to CI can be made on Form 2797, Referral Report of Potential Criminal Fraud Cases. Examiners should develop the issue to establish firm indicators of fraud/willfulness, including, but not limited to:

If the criminal referral is declined, or if the criminal case is resolved, examiners should retain a copy of the related taxpayer’s examination report (Form 4549) and relevant workpapers so the IRC 6694 civil return preparer penalties may be pursued. See IRM 25.1.3.7, Return Preparers, IRM 25.1.2.9, Return Preparer Fraud, and IRM 25.24, Return Preparer Misconduct Program, for additional information.