Tax Roundup, 12/24/2012: the coming preparer crash. Also: a modest fiscal cliff proposal.

December 24th, 2012 by Joe Kristan

20121224-1IRS preparer rules may create a catastrophic preparer shortage.  A press release last week from the IRS urging preparers to take the new Registered Tax Return Preparer examination saves the real news until the end (my emphasis):

So far, there are more than 48,000 preparers who have earned RTRP certificates. There also has been an increase in the number of people taking the enrolled agent exam.

Starting Jan. 1, 2014, only registered tax return preparers, enrolled agents, CPAs and attorneys will be authorized to prepare and sign federal individual returns.

There are currently 739,000 tax preparers with 2012 PTINs. Approximately 350,000 of them are subject to the new testing and CE requirements.

It’s likely the population of authorized return preparers will crash.  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 increase prices.  It will cause some taxpayers on the margin to prepare their own returns, and some to stop filing altogether.  Hardly a step forward for tax administration.

UPDATE, 12/27: The IRS Regulates Mom-and-Pop Tax Preparers Out of Business, Just in Time for Tax Season!

 

Tyler Cowen: point out that the rich guy isn’t buying.  The economist makes an interesting suggestion for the GOP now that “Plan B” has failed (my emphasis):

 To see how this could work, consider this script: Let’s say the Republicans decide to largely give in to what the President Obama is proposing. There is, however, a catch: the president has to agree to raise marginal tax rates on all income classes, not just on the rich.  The tax increase would be one-quarter of a percentage point, or some other arbitrary small amount, with larger increases possible for higher incomes, as has been discussed. The deal also stipulates that both the president and Congress must publicly acknowledge that current plans for government spending can’t be financed unless taxes on most or all income groups climb further yet, and by some hefty amount.

This highlights the frivolous, depressing and maddening nature of the “Fiscal Cliff” crisis. They will solve nothing, regardless of the outcome.  The President resolutely ignores the continuing fiscal catastrophe.  Nothing he proposes pays for more than rounding error in federal spending.  His only concern is scoring political points, not solving the problem.  A demoralized GOP lacks the nerve, and perhaps the conviction, to call for the spending cuts needed to approach fiscal sanity.

Of course,  “The Rich” simply don’t have enough money to pay for our incontinent government.

 

Joseph Henchman:  Switzerland “Debt Brake” As Consensus Policy Option for America? (Tax Policy Blog)

 

Fiscal Cliff Notes:

Kay Bell,  Average tax bill increase if we fall off the fiscal cliff? $3,446

Patrick Temple-West,  Boehner’s budget ‘Plan B’ collapses, and more (Tax Break)

Janet Novack,  Obama Plays The Adult In The Room–Before Leaving For Hawaiian Holiday

Peter Reilly,  All I Want For Christmas Is An AMT Patch.  Me too.

Trich McIntire,  Congressional Con

Jim Maule, Tax Pledges: Never Say Never.

 

He’s a little people now.  From an FBI press release:

John J. McCauley Jr., 54, owner and co-operator of McCauley and L’Europa  Public Adjusters LLC and PIA Restoration LLC in Providence Rhode Island, and longtime Rhode Island state legislator, was sentenced today to 27 months in federal prison for conspiracy to defraud the United States of more than $500,000 and filing false tax returns…

Like some other politicians, he can take the taxes, but he can’t dish them out.  He was Deputy Speaker of the Rhode Island House, according to this report.

 

TaxProf, Deconstruction Deduction:  Home Disassembly and Charitable Donation Rather Than Demolition Yields Big Tax Savings

Jason Dinesen, New Preparer Requirements on Earned Income Credit = Higher Fees for Clients

12 Days of Charitable Giving 2012: Fisher House Foundation

Jack Townsend, Evasion of Payment Statute of Limitations Runs from the Last Affirmative Act

Russ Fox,  Fat Joe Takes the Rap

Merry Christmas!  TaxVox’s 2012 Lump of Coal Awards  (Howard Gleckman)

Wow.  From the TaxProf:

Yesterday morning, my son was on a bus on I-80 with 52 other Grinnell College students heading to the Des Moines airport to fly home for the Christmas holiday when the driver suffered a fatal heart attack.  The bus veered off the highway to the right, into a snowbank from the 12 inches of snow that fell in Iowa last Thursday.  Miraculously, none of the students were injured, and after being transported to the hospital in Newton, Iowa, Grinnell arranged for alternative transportation for the students to the airport.

My older son drove that route yesterday coming home from school in Chicago.  Happily, his trip was unexciting.  I hope all of you who are traveling this week arrive safely.

 

That would be sexy indeed.  Too Sexy for Iowa  (The Other McCain).

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