IRS plan to regulate paid tax preparers has merit

Taxpayers should have reasonable assurance they have gone to the proper place for help with their tax returns.


We generally bristle at more government regulation, particularly if all it does is create added paper-pushing.

However, the federal government appears to be moving in the right direction with its plan to better regulate those who are paid to prepare income tax returns.

Too many of those who claim they are qualified to prepare taxes do a lousy job. And, unfortunately, it is the taxpayer who is left to clean up the mess and pay the fines.

The Internal Revenue Service announced this week it plans to test, register and screen people who get paid to prepare tax returns, The Washington Post reported. The IRS says it wants to crack down on preparers who do shoddy or fraudulent work and also create a way for consumers to make more informed choices.

"In most states you need a license to cut someone's hair," but today "most tax-return preparers don't have to meet any standards when they sit down and prepare a federal tax return for an American taxpayer," IRS Commissioner Douglas Shulman said in an interview with a Post reporter.

Shulman might be overselling that point a bit. The IRS already regulates certified public accountants, enrolled agents and attorneys who prepare taxes. They are subject to testing, licensing requirements and continuing education requirements.

The problem isn't with the professionals who know what they are doing, but with folks -- some well intended, some not -- who simply don't know what they are doing.

According to the Wall Street Journal, government auditors in undercover visits to offices found high levels of inaccuracies and distortions on returns done by those branding themselves as generic "tax preparers" or "tax consultants."

And this is a growing problem.In 2006, the Journal reported, the Better Business Bureau received 1,473 complaints against tax preparers, which ranked them 120 out of about 3,800 industry categories. In 2008, the number of tax-preparation complaints jumped to 2,276, ranking the industry 80th. Often, the complaints concerned errors that caused consumers to pay fees to resolve the problem, according to the Journal.

It seems clear action is needed to protect consumers -- taxpayers. Filling out income tax forms is complicated. Many people need help. When they seek help they should have a reasonable assurance they have gone to the proper place for that help.

Still, the right touch is needed by the IRS. The cost can't be unreasonable and enforcement can't be overzealous.

The goal shouldn't be to put hard-working, trained tax preparers out of business, but to protect the public from those who are not qualified to prepare taxes.

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