In an astonishing power grab, the Internal Revenue Service wants to license all who prepare returns for taxpayers. This means that Uncle Oscar couldn’t help his nephew prepare his income tax return unless a Washington bureaucrat grants a license.
H&R Block and the National Association of Tax Professionals (NATP) are supporting the effort by IRS Commissioner Douglas Shulman for selfish reasons: If Uncle Oscar can’t help, his nephew must pay a “licensed” preparer.
Shulman said in testimony before the House Ways and Means Committee that he expects to make his recommendations to Treasury Secretary Timothy Geithner and President Obama by the end of the year.
Shulman argued that licensing is needed because of bad guy tax preparers. Of the millions of tax returns filed over the last three years, only about 350 preparers were convicted of fraud, according to the IRS’s own records.
Ryan Ellis, tax policy director at Americans for Tax Reform, challenged IRS claims that licensing would generate significant funds from “tax cheats.” He told the Washington Times, “If the IRS thinks that licensing tax preparers will raise a lot of money, it won’t.”
Shulman’s recommendations “could focus on a new model for the regulation of tax return preparers; education and training of return preparers; and enforcement related to return preparer misconduct,” the IRS said.
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“Education” and “training”? Many times over the years, newspapers have sent male and female reporters, posing as married couples, to IRS offices for “help” with their returns. They would offer simple situations: two kids and a mortgage. In an overwhelming majority of cases, four different IRS “professionals” would prepare their returns in four different ways.
Shulman said 87 percent of taxpayers now use computer software or paid preparers. “Tax preparers and the associated industry can help us increase compliance and strengthen the integrity of the tax system,” Shulman said. On the subject of “integrity,” he failed to mention David Rockefeller and other billionaires who pay no income tax at all by ducking their obligations with the help of high-priced “preparers.”
The first step in the licensing process, the IRS said, will involve fact-finding
and receiving input from unlicensed tax preparers and software vendors, as well as those who are licensed by state and federal authorities, including enrolled agents, lawyers and accountants.
“H&R Block strongly supports the IRS initiative announced by Commissioner Doug Shulman to review comprehensively alternatives for improving the accuracy of tax filings and the ethics and integrity of all who hold themselves out directly or indirectly in providing tax preparation services,” said Chairman Richard Breeden.
“We are all in favor of raising the bar,” said NATP’s Paul Cinquemani. “If people are operating out there without continuing education, they are on dangerous ground.”