The IRS's crackdown on bad tax preparers is gaining momentum.
In June, the agency announced that it was preparing a series of recommendations meant to increase taxpayer compliance and improve the work of tax preparers. Those recommendations may include a call for all paid tax preparers to be licensed.
Since then, we've seen:
- Taxpayer Advocate Nina Olson cite “enhanced IRS oversight of federal tax return preparers” as one of her priorities for the coming year; and
- the announcement of a series of public forums at which consumer groups and tax professional organizations can offer input into the development of the IRS's recommendations.
Now comes word that the IRS is seeking input on tax preparer compliance from the public at large.
Is government regulation necessary here?
It's hard to say. The AICPA doesn't think so. It's convinced that the IRS already has the tools necessary to reduce tax reporting errors and ensure adequate compliance.
But considering all the recent headlines — including the fact that the IRS is having trouble tracking the compliance of paid tax preparers — it's apparent that the IRS is serious about heading down this path.
If that's the case, the agency needs to do this the right way.
In 2008, Maryland's General Assembly approved the creation of a new licensing and regulatory program for individual tax preparers. Thanks to significant work on the part of the MACPA and its legislative volunteers, this program includes the following provisions:
- All licensed CPAs and their staffs are exempt from Maryland's licensing requirement.
- The qualifications of tax preparers will be well publicized, as will the fact that the registered tax preparers are not CPAs, tax attorney or enrolled agents.
- Use of the terms “licensed” and “certified” are limited in Maryland, so as to not confuse the public.
- At least one seat on the new State Board of Tax Preparers is reserved for a CPA.
Maryland is exempting CPAs from the mandate and making them an integral part of the process. That's doing it right.
Let's hope the IRS follows a similar path. We'll be watching, just in case.
What do you think: Should the IRS regulate tax preparers?