David Brunori unleashes righteous anger on the IRS preparer regulation power grab in a wonderful Tax Analyists piece — one that is, unfortunately, only available right now to Tax Analysts subscribers (Update, 4/4/12: Tax Analysts has made the post available here.). A taste:
IRS Commissioner Douglas Shulman praised the regulations when they were first proposed, saying they would “help ensure taxpayers receive competent, ethical service from qualified professionals and strengthen the integrity of the nation’s tax system.” Really? The irony of the IRS wanting to ensure preparer competency is palpable. The Service is notorious for handing out incorrect information to ordinary citizens who call for help. Millions of Americans rely on IRS advice at their peril, yet the agency is worried about the competency of the preparers?
He correctly identifies the real forces behind the rules:
H&R Block and Jackson Hewitt were tripping over themselves in support of the regulations. They know that onerous regulations will impose a cost on paid preparers, particularly individuals. That cost will force many preparers out of business. The big preparer companies cannot wait to get their hands on the millions of Americans who will be looking for tax help. Even more outrageous is the fact that H&R Block and other big companies will be exempt from some of the regulations. If a preparer is supervised by a lawyer or CPA, he is deemed both ethical and competent (although he still must register for a preparer tax identification number). So H&R Block and Jackson Hewitt not only escape the burdens of the regulations, but their direct competitors will be put out of business.
And, of course, it required high-placed wire pulling:
The Podesta Group, led by former Obama administration official Tony Podesta, was lobbying for the regulations on behalf of H&R Block. That is the way Washington works.
Meanwhile, 2 million returns are not being processed because electronic filing identity theft is completely out of control this year. Software “glitches” have bogged down the processing of the honest returns that do come through. But at least the IRS is issuing preparer ID numbers.
Related:
Preparer regulation: justified by its ‘mere existence’?
Preparer regulation: prepare for a mess.
Tags: David Brunori, prepaers, preparer regulation, Shulman, tax administration
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to
I believe the new regulations require tax return preparers working at tax preparation firms where they sign returns to obtain PTINs as well as pass the competency exam and complete annual CPE. So, I not sure how any preparers at the big tax prep services escape the new rules. I do see how staff tax preparers at big CPA firms are exempt — they don’t sign tax returns despite performing most of the work on returns. Still, I get your point about the regulations protecting vested interests. But, that is the purpose of professional licensing. Anyone who believes that licensing standards are designed to protect the public is naive at best and a fool at worst.
[...] That will increase demand for the big national tax preparation franchises, which probably was the real goal the new regulations – written by a former president of H&R Block. A reduction in preparer supply will [...]