The most unusual aspect about the tax industry is how minimal their seasons are compared to almost every other industry. In just a few months, paid tax preparers generated almost 8 billion in annual revenue by processing 23% of 82 million returns filed just last year.
This makes owning a tax franchise a highly lucrative investment. Below are some new licensing rules that everyone in the industry needs to know:
Another aspect of tax preparation that is not present in many other franchises in the need for licensing. Until this year, only Oregon and California required tax preparers to be registered and licensed. However, the IRS very recently passed new regulations. Starting in 2011, all tax preparers must provide a PTIN, or preparer tax identification number, with every return. Preparers must submit an online or paper application and pay a fee to acquire a PTIN, and they must take one of two competency exams offered by the IRS, either in person or online, and pass it, before the end of 2013; the tests are just coming available now. They must also keep up with continuing education classes. In addition, those wishing to electronically file must also apply for an EFIN, or an electronic filing identification number. Preparers who reasonably expect to file 100 or more returns are required to e-file and thus apply for an EFIN.
The new regulations were put into place to prevent both fraud and preparers who simply make errors too frequently, particularly in regard to smaller firms and individuals. Between 2006 and 2008, the IRS began 600 investigations into the fraudulent actions of tax preparers, which led to 356 convictions, many of these resulting in prison sentences. In 2006, the Government Accountability Office investigated tax preparers by posing as taxpayers needing returns filed, and out of nineteen cases, found that five made significant errors. These new procedures have the potential danger to lead to higher costs, as it could be more difficult and costly to pay licensed preparers.
Luckily paid tax preparers will always be in demand due to the ever changing laws and guidelines, and have a projected growth rate of 4% annually until 2015. So if you are on the fence about getting into the tax preparation franchise, there really is no better time than now.
Will you or your company be using a paid tax preparer this year or using some type of software?
Article Source: Franchise Help
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