Everybody’s talking about licensing tax preparers. My rant the other day against licensing drew two long and thoughtful responses in the comments, and other tax blogs are pitching in.
TaxGrrrl seems to be in my corner:
Therein is the problem: will certification actually improve tax compliance and reduce fraud?
Even if it would, how could the IRS possibly regulate the industry? In 2007, there were nearly 138 million individual federal income tax returns filed. Sixty-one percent of those individual federal income tax returnsTags: Kay Bell, preparer penalties, Preparers, Robert D Flach, Tax Grrrl
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Joe,
And what an excellent rant it was . . .
I agree with you that regulation won’t “solve” the problem of unscrupulous, incompetent tax preparation.
But when does any law regulating or prohibiting conduct ever eliminate that conduct altogether?
Never.
We have laws prohibiting drug trafficking, yet we still have drug traffickers. We have laws prohibiting drunk driving, yet we still have Dante Stallworth.
I am no way suggesting that the regulation of unlicensed preparers will permanently eradicate bad tax preparation.
I am merely suggesting that since CPAs, Tax Lawyers and IRS Enrolled Agents are heavily regulated (and by virtue of their education and continuing training are the least likely to engage in unscrupulous conduct) we ought to level the playing field and monitor the rest of the tax preparers, too.
The regulation doesn’t have to be all that involved. It could be as simple as requiring tax preparers to register with the IRS and obtain a preparer number.
In order to renew their registration, each preparer might be required to prove that he or she has obtained a minimal level of continuing education credits necessary to keep up with changing tax laws.
What’s the big deal?
Joe, I almost forgot.
I am proposing that these new regulations ONLY apply to non-CPA, non-lawyer and non-IRS Enrolled Agents who are already regulated under a different regulatory regime.
If you are not a CPA, lawyer or IRS enrolled agent, then, and only then, would you be required to register with the IRS.
I also do not believe licensing will solve any problems. We should allow the consumer to choose the service they want. This is a case where you still get what you pay for. If you want cheap, you may have issues with quality. If you want quality, expect that there is a price.
I feel licensing will just create an “underground” system of preparers who prepare the returns but now do not even sign them.
To DB-
I expect the “underground” system of unethical preparers who do not sign the tax returns they prepare already exists.
To JK-
Opponents are constantly saying licensure will be costly for tax pros. I don’t see how (see my Comments on a Comment post). Could you tell me what you anticipate licensure will cost the average tax pro?
Thanks!
TWTP