Speaking to Accountants Daily, Victorian barrister Chris Wallis said the solution to unregistered agents could be a potentially easy fix if the ATO decides to deny tax refunds to bank accounts that do not correspond to the taxpayer lodging or the trust account of the registered tax agent.
Mr Wallis said unregistered tax agents usually apply two business models, guaranteeing a refund being paid on the day.
One model works by helping a taxpayer prepare a return before getting them to self-lodge it, with the refund directed to the unregistered preparer’s bank account, escaping the need for a registration.
The other sees an unregistered agent borrow the registration number of a registered tax agent but directs refunds to the unregistered agent’s bank account.
“The commissioner just believes it is [the taxpayer’s] account, but that’s rubbish because when the commissioner does the tax return, he knows full well what bank account that person’s, got so that’s a simple match,” Mr Wallis said.
“Unregistered agents have no place in this world at all. The commissioner has resources to bring an end to the business models to allow them to operate in the way they do.
“Unless the cheque is going to an account that is on that person’s tax profile on the pre-populated form, it ain’t going out. That’s how easy it is — no refund cheque goes out to someone unless it is going to an account in that person’s pre-populated form.
“With agents, you know who the registered agents are, so it is not hard to say, ‘Please nominate your trust account for refunds please’, and they are the only accounts in which refunds are transferred to.”
In the last financial year, the Tax Practitioners Board received 149 complaints about unregistered agents.
Mr Wallis believes the ATO should make full use of technology and the data it has on file to weed out unregistered agents.
“The commissioner has got to have the will to make the change — it is simple because the information is already in his possession,” he said.
“With the agents, he just has to make an administrative change — no registered tax agent is getting a refund unless it is to an account that is registered to us, and we’re going to introduce that over 90 days. I tell you what, they’ll have the account registered overnight.
“It is about time they make use of the technology they’ve got instead of making excuses for not using it.”