Anthony DeFranco, CPA gives tax update to local service organization.

May 26, 2011 - PRLog -- SOUTH ORANGE –“The Internal Revenue Service is trying to improve the quality and oversight of the tax preparation industry by cracking down on tax preparers with criminal tax convictions or permanent injunctions from preparing tax returns for clients,” said Anthony DeFranco, CPA, Partner at Couto, DeFranco, CPAs, in West Orange, NJ.

DeFranco explained to the South Orange Rotary Club that “tax preparers nationwide must register with the IRS and obtain Preparer Tax Identification Numbers (PTINs). This nine-digit number must be used by paid tax return preparers on all returns or claims for refund. Paid preparers must renew their PTINs annually to legally prepare tax returns. This will help legitimatize the industry.”

He also stated, “starting this fall, certain paid preparers will be required to pass a new competency exam.” The IRS will also conduct background checks on certain paid preparers. In 2012, certain paid preparers will be required to obtain 15 hours of continuing education annually. Certified Public Accountants, attorneys and enrolled agents are exempt from the competency testing and continuing education requirements because of similar professional standards already applicable to those groups. Supervised employees of these exempt groups also are generally exempt.

“Taxpayer and Tax Preparer Penalties” was another topic DeFranco covered. The most common taxpayer penalties for individuals are failure to file and failure to pay.  Both are calculated on the amount due on a tax return so if no money is due, then there is not a penalty. The IRS has assessed tax preparer penalties which are now more punitive to the preparer. These penalties can be assessed against the preparer for taking unrealistic positions on tax returns or a preparer’s reckless disregard of rules.  The penalties are the greater of $5,000 or 50% of the income derived from the preparation of the tax return.

In conclusion, Anthony DeFranco told the group about recent tax law changes – the recent tax act which was signed on Dec. 17th (Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010). Some of the more popular provisions which have been extended temporarily for the next 2 years include: the reduction in individual income tax rates, the preferential capital gains and dividend tax rates, the expanded dependent care credit, the expanded Coverdell education accounts, and The American Opportunity Tax Credit. DeFranco discussed the current reduced tax rates in effect and different tax brackets and ended his presentation with the gift and estate tax law updates, in which the current gift tax exclusion for 2011 is $13,000, the current estate tax exclusion is $5 million for 2011 and 2012.

Anthony DeFranco, CPA, MS, CFP™, is a partner in the New Jersey CPA firm of Couto DeFranco, CPAs,  located in West Orange, NJ. This NJ CPA firm has been in business for almost twenty years specializing in accounting and tax work for individuals and businesses.  They handle basic tax preparation and accounting for individuals and small businesses to more complex individual and corporate tax planning. The services of Couto DeFranco, CPAs are designed around a singular goal - to help you capitalize on the opportunities life presents.

For more information, visit www.coutodefranco.com or call (973) 325-3370.

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At Couto DeFranco we are dedicated to providing timely, proactive accounting and tax services to all of our clients. In addition to addressing your present needs, we'll help position your financial program to address your future goals.