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IRS moves to regulate preparers
June 05, 2009
The IRS announced a project that is likely lead to an IRS licensing process for tax preparers. Lawyer-blogger Peter Pappas is all for it:
While I am sceptical of government regulation, I think this is an area that begs for it.We have had many clients come to us over the years who have been duped by unscrupulous or merely incompetent unlicensed tax preparers.
There is no shortage of “tax preparers” out there who illegally promise their clients large tax refunds in order to get their business.
I'm not enthused. While there are plenty of abusive preparers out there, the IRS already has severe penalties that it can impose to deter and shut down abusers. If the current amount of bureaucracy isn't effective, more and bigger bureaucracy probably isn't the solution. All it will do is create more annoyances for legitimate preparers while raising compliance costs for taxpayers.
In the near term, a more active and effective IRS process to detect abusers, and a more streamlined process to address them, strike me as better answers. The long term solution is a simplified tax law that doesn't try to do everything from promote energy efficiency to encourage college savings -- in other words, a tax law that doesn't require everybody to go to a preparer.
The TaxProf has a roundup.
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Comments
True, but though your grandma might have some good homeopathy, I feel secure in the hands of a licensed doctor, yaknowwhatimean?
Posted by: John | June 6, 2009 9:19 AM
John, then you can always go to a "doctor" (say, a CPA or enrolled agent), while Grandma can go to H&R.
And just as there are quack doctors and quack CPAs, there will be quack "licensed" tax preparers. The requirements won't be very tough, because if they were you couldn't get the millions of returns done. It will just give us another expensive and ineffective layer of regulators.
Posted by: Joe Kristan | June 6, 2009 9:49 AM