An interview with Carlos Lopez of Latino Tax Professional Association
ROSS WOLFE: So what’s the story with the new Tax Preparer requirements?
CARLOS LOPEZ: In 2007, the IRS commissioner made it one of his roles in his term to register all tax return preparers who aren’t enrolled agents, CPAs, or attorneys. Up until recently, only California and Oregon required non-professionals (or the unenrolled preparer) to take a course, pass a test, and register with the state. So that meant that in forty-eight other states, all someone needed to do was hang up a shingle, so to speak, and have a business license, and you could prepare tax returns without any training or any responsibility. The way the new license works is that you have to register with the IRS to get a Preparer Tax Identification Number (PTIN), and then you have until December 31 of next year to pass a test. The test is 120 questions; it lasts two-and-a-half hours. Once you pass the test you get a permanent license, but you’re still required to complete fifteen hours of continuing education per year with an approved provider or vendor from the IRS. This year, the IRS is allowing provisional PTINs. That means you can apply for a PTIN and prepare tax returns as long as you’ve put in the fifteen hours. You can do that again next year, but you will have to pass the test.
ROSS WOLFE: Ok, got it. What happens if someone tries to prepare someone else’s taxes without registration?
CARLOS LOPEZ: The IRS pretty much knows who’s out there preparing tax returns without licenses. But the only way they can really catch someone or discover who these people are, is when the taxpayers themselves get audited by the IRS. It’s called the CP-2000, which is a letter that tells you that there’s something wrong on the tax return, or it doesn’t match the IRS’ records. Of course the IRS doesn’t publish the criteria, but everyone pretty much knows it’s the earned income tax credit, it’s the additional child tax credit, it’s the American opportunities credit for education, and of course dependents. So if you prepare a return without registration and get caught, or if somehow the IRS finds out, you will be subject to monetary penalties. Maybe even worse. If it’s fraud, there may even be some criminal penalties involved.
“Who educates the educator?” The old philosophical conundrum, here depicted in Rafael’s School of Athens featuring Plato and Aristotle
ROSS WOLFE: There’s an old philosophical conundrum that goes: “Who educates the educator?” In the world of tax preparation, the equivalent would be: “Who prepares the Tax Preparers?” How does your company help Tax Preparers get registered to serve their customers?
CARLOS LOPEZ: That’s a good question. In 1999, we applied to become a California tax education council vendor. We decided then that we would grow our company and open multiple offices, etc. And the way we did that was to have defined policies and procedures, and most importantly, to train our staff the way we want them to prepare tax returns through the methodologies that we’ve used. By 1999, I’d already been in practice for 17 years, so I had a pretty good idea of how I wanted tax returns prepared and how the office should flow. I also have a business degree from UCLA, so I was able to put my education and training into play by helping our company to open up multiple offices. At this time, we worked on putting a program together to train specifically Californian tax preparers.
Around 2007, when we found out the IRS was going to make this mandatory nationwide, we decided to go ahead and expand in order to become a national project. So we’ve combined 30 years of tax preparation experience and 13 years of educational experience to provide a complete comprehensive program to train younger tax preparers.
Latino Tax Professionals Association logo
ROSS WOLFE: I saw you guys present at the IRS Tax Forum here in New York. What would you say is the importance of training bilingual Tax Preparers who come from the Latin American community?
CARLOS LOPEZ: You know, every time I’ve worked with the IRS during the last five years that I’ve been a stakeholder liaison (i.e., practitioner-partner with the IRS), it constantly comes up that the IRS really wants to reach out to the Spanish-speaking tax preparer. They’re not sure how many are out there. The estimates range everywhere from over 100,000 to as high as 300,000 tax preparers whose primary language is Spanish, while their secondary language is English. The IRS already has several publications all in Spanish. Several forms are even in Spanish. They’re working hard to outreach to the Latin American tax preparer. And that’s the reason we formed Latino Tax Professional Association, because paid tax preparers make up the largest community of unaffiliated tax professionals in the country. So our purpose is to provide knowledge, community, and professionalism to this unaffiliated group. We’re finding out that most of them don’t know how to test online, they have trouble recovering their passwords, and — while they do e-mail — their usage of the Internet is quite limited. So it’s up to us to help them segue into this modern world of tax preparation.
ROSS WOLFE: Is it possible for a tax preparer to take the registration exam in Spanish, or do they have to take it in English?
CARLOS LOPEZ: Right now it’s still in English. So what we’ve done with our products is to make them bilingual. On each page, one column is in English while the other is in Spanish. Our products aren’t just translated; they’re interpreted. So if they have trouble understanding a concept in English, they can turn right over to the next column and read it in Spanish. And that’s important because then they can begin to understand tricky tax laws in another language.