New changes in Tax Preparation Industry

The tax preparation industry is made up of all the professional tax preparers who help us prepare and file returns. The business of this industry is helped by the fact that almost all adult working Americans as well as foreign workers in the country have to file their returns and pay taxes. The industry comprises of individuals as well as agencies. Traditionally, the industry has been very successful as it is hardly impacted by recession. Investment in terms of business capital is low as there is hardly any inventory involved, so costs required for warehouses, transportation, etc are not involved. But, off late the changes in taxation policies and the way taxes get filed has led to losses to the older firms.

1. Tax preparation software – Many tax preparation softwares are available in the market at negligible prices, starting from $30. People are more prone to save on money and have been moving towards these softwares. Also, if people do not need much guidance on their investments or on tax saving schemes or if their tax returns are pretty straight forward they prefer using tax preparation software.

2. E-filing – The Internal Revenue Service (IRS) has mandated filing of returns electronically by the preparers. A tax payer may choose not to e-file, but a preparer has to. A tax payer can send his or her return via mail and sign a declaration stating that he or she does not want to file electronically. But, e-filing a return ensures that the return is received and processing of refund if any is faster.

3. Refund Application Loans (RALs) – These loans are short-terms loans that the tax preparation companies were offering to their customers which would then be recovered from the refund issued by the IRS. These are being discouraged by the IRS now and this business is taking a beating.

4. On a positive note, the IRS has asked all tax preparers to register with them and pass competency examinations based on which these preparers will be issued PTINs (Preparer Identification Numbers) that will be endorsed on the returns they prepare and file. This will ensure the quality and authenticity of the preparer and avoid fraud. This will keep all underground tax preparers and cheats at bay.
These changes in the tax preparation world have shaken up a few old runners in the field and it is left to see what they will come up with to attract more business.

Author Bio
Sandeep Chauhan started ,he has 10+ years of experience in designing solutions for fortune 500 companies.In his free time, he likes to play with his dog and go travelling. Sandeep holds an MBA from the University of Michigan. Sandeep is responsible for Product Vision, Marketing and Technology at .
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