Tax Lawyer's Blog

The Associated Press reports that the IRS is prodding Congress to enact new laws that will regulate and monitor tax preparers:

Paying taxes is one of the largest financial transactions individual Americans have each year, and we need to make sure that professionals who serve them are ethical and ensure the right amount of tax is paid,” Shulman told the House Ways and Means Subcommittee on Oversight.

Shulman said he will seek input from the industry before making his proposals to President Barack Obama by the end of the year. The proposals could include new regulations or laws.

“I want to enter this with an open mind,” Shulman said. “For me, everything’s on the table.”

Rep. Xavier Becerra, D-Calif., welcomed Shulman’s announcement, saying professional tax preparers should be required to show competency.

“All sorts of people are being paid” to prepare taxes, Becerra said. “There’s no clear standard.”

(Read the entire IRS announcement at IRS Launches Tax Return Preparer Review; Recommendations to Improve Compliance Expected by Year End.)

While I am sceptical of government regulation, I think this is an area that begs for it.

We have had many clients come to us over the years who have been duped by unscrupulous or merely incompetent unlicensed tax preparers.

There is no shortage of “tax preparers” out there who illegally promise their clients large tax refunds in order to get their business.

Here are some examples of tax wackiness we’ve seen:

• Slavery reparation credits
• Schedule C businesses with tens of thousands of dollars of losses and no income
• Schedule A job expenses that exceed 50% of the taxpayer’s wages.

Related Posts:

Tax Preparers Beware: Federal Regulaton May be on the Way

Ex Jackson Hewitt Tax Preparer Guilty of Tax Fraud

IRS Raids “Taxes by Mr. Bill”

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