Transforming the Tax Industry: Carlos C. Lopez's Recommendations for Streamlining Processes and Enhancing the Taxpayer Experience

We have some exciting updates about our recent achievements and initiatives. Our association has been actively working to improve the tax industry, and we have some significant developments to discuss.

Carlos C. Lopez, EA (Latino Tax Pro CEO) is part of two groups that work hand in hand with the IRS.

  1. Electronic Tax Administration Advisory Committee (ETAAC)
    • ETAAC is an advisory body that provides recommendations to the Internal Revenue Service (IRS) on electronic tax administration issues, including e-filing of tax returns, identity theft prevention and detection, cybersecurity, and customer service. The committee comprises representatives from various industries, including tax preparation software companies, financial institutions, state tax authorities, and consumer advocacy groups. ETAAC was established in 1998 and continues to provide valuable guidance to the IRS in improving electronic tax administration.

  2. Council for electronic revenue communication advancement (CERCA)
    • CERCA is a professional association focused on promoting the use of electronic communication to improve revenue collection by government agencies. It comprises individuals who work for revenue agencies, technology vendors, and other stakeholders involved in electronic revenue communication. They hold conferences and other events to promote sharing of ideas and information and provide education and training on emerging technologies and trends in electronic revenue communication.


We want to talk about Mr. Lopez's recommendations to the IRS, which has the potential to impact the tax industry significantly. Mr. Lopez has proposed two fundamental changes that could streamline the tax filing process and improve the taxpayer experience.

The first recommendation is to streamline third-party authorization processes by integrating Forms 8821 and 2848 into the Modernized e-File (MeF) platform. Currently, these forms must be mailed, faxed, or filled out online, which creates a disconnect between the taxpayer and the timely return filing process. Additionally, Mr. Lopez has suggested enhancing the Third-Party Designee section of the tax return by adding a checkbox that allows tax practitioners to include their Centralized Authorization File (CAF) number. This would enable the IRS to recognize the Designee as a credentialed practitioner, granting them further authority to assist their clients.

Form 8821, or the Tax Information Authorization form, allows taxpayers to designate a third party to access their tax information.

Form 2848, or the Power of Attorney and Declaration of Representative form, authorizes an individual to represent the taxpayer before the IRS.

By incorporating these forms into the MeF platform and adding a checkbox for tax practitioners to include their Centralized Authorization File (CAF) number in the Third-Party Designee section of the tax return, tax professionals can more efficiently obtain necessary authorizations. In addition, this change will save time and simplify the overall filing process for taxpayers, eliminating the need for mailing, faxing, or filling out forms online separately from the return filing process.

We also want to mention another important aspect of Mr. Lopez's recommendations to the IRS. In addition to streamlining third-party authorization processes and integrating Forms 8821 and 2848 into the MeF platform, Mr. Lopez has emphasized the need for proper training of IRS staff. This includes ensuring that IRS personnel know the length of the Third-Party Designee authorization on the 1040 form, which is one year from the due date, not the processed date.

Providing consistent training to IRS staff on this matter will help reduce the confusion and frustration that tax professionals might experience when trying to assist their clients. In addition, this improvement in IRS staff knowledge and awareness will contribute to a smoother and more efficient tax filing process, further enhancing the overall taxpayer experience.

The second recommendation made by Mr. Lopez addresses the current issue of "ghost" tax preparers and unregulated tax preparers disrupting the taxpayer experience. Tax preparers submit about 60% of returns filed, but the tax field is currently unregulated, and most people in the tax business have no credentials. The only current requirement for preparing tax returns for compensation is purchasing a Preparer Tax Identification Number (PTIN) for $30.75. While this allows the IRS to track preparer performance, it is not a license and must be renewed annually.

With a significant portion of tax returns filed by tax preparers without proper credentials, there is a growing concern about the accuracy and legitimacy of these filings. While it is impossible to quantify how many inaccurate returns prepared by unlicensed and ghost preparers are intentionally fraudulent, they do tend to create larger refunds and often more considerable fees, to the detriment of the individual taxpayer and the taxpaying public at large. The IRS has done a great job using technology to reduce the issuance of fraudulent refunds, and return preparer oversight is the logical next step. Still, they need Congress to grant this authority.

Currently, PTIN holders are not required to take any training, hold any license, or adhere to ethical standards. Only Enrolled Agents and CPAs have to fulfill specific education and ethical requirements.

However, there are voluntary ways for tax preparers to demonstrate their competency to the IRS. These include.

  1. Participating in the IRS/VITA program, which requires volunteers to pass a competency test before volunteering.

  2. The Annual Filing Season Program (AFSP), which allows well-intentioned tax preparers to take 18 hours of continuing education and pass a quiz on current tax law to receive a certificate to display in their practice.

  3. The Enrolled Agent program, which consists of a three-part comprehensive IRS test covering individual and business tax returns, ethical standards, and best practices for tax professionals.

Mr. Lopez emphasizes the need for Congress to give the Treasury the authority to set minimum competency standards for tax professionals. By implementing a proactive approach, the IRS can ensure that tax professionals are well-trained, adhere to ethical standards, and provide accurate services to taxpayers. This will ultimately protect taxpayers from incompetent and unscrupulous return preparers while safeguarding the Treasury from fraudulent refund claims.

In conclusion, Mr. Lopez's recommendations to the IRS have the potential to significantly improve the tax industry by focusing on streamlining authorization processes, enhancing the role of tax professionals, setting minimum competency standards, and providing proper training to IRS staff. These combined efforts will ultimately lead to a more efficient, reliable, and user-friendly tax filing experience for taxpayers and professionals.


Written by:
Alberto Contreras, Chief Revenue Officer, Latino Tax Pro