Back to School: Group Files Suit to Stop Continuing Education and Exam Requirements for Paid Preparers
This week, a group called the Institute for Justice filed suit against the Internal Revenue Service (IRS) for new regulations being implemented regarding paid tax preparers. The self-described “libertarian, civil liberties, public interest law firm” says the regulations are unfair to paid preparers. We disagree.
NCTC actively advocated for and has supported stronger regulation of paid preparers for quite some time. The new rules for commercial preparers, which started last year, were a huge victory for consumers. We believed then and now that taxpayers – particularly those with low incomes – should have access to competent, well-trained tax preparers, whether at a VITA site or a commercial office.
The new rules require most paid preparers* to:
- Pass an IRS-issued competency exam
- Take continuing education classes to keep up with tax law changes
- Renew their Preparer Tax Identification Number annually
Each year, VITA volunteers must participate in hours of training and pass a competency exam. Why should paid preparers be any different?
Consumers who pay steep preparation fees – often more than $400 – deserve a quality product, in this case to have their taxes done accurately. Considering an inaccurate return can also result in legal consequences and fines, accuracy is even more important.
The new rules are a great step toward preventing many of these problems. The regulations will:
- Prevent continued loss of income tax revenue that results from inflated refunds and under-reported liabilities.
- Track problem preparers who stretch the limited resources of state and federal tax enforcement offices.
- Provide critical consumer education and resources to refer taxpayers to qualified tax preparers and protect their rights as taxpayers.
- Protect taxpayers from fraudulent and misleading marketing schemes that disguise preparer qualifications and conceal the true cost of services and loan products.
- Maximize the effectiveness of refundable tax credit programs that are critical to the nation’s most financially vulnerable populations.
For many low-income families, a tax refund is the one chance each year they have to pay down debt, save for an emergency or replace a broken household appliance. High preparation fees and inaccurate returns can negatively alter their refunds, setting families back even further.
Some commercial preparers say the regulations will make it harder for them to do business. But this is an industry that makes millions, if not billions, of dollars each year. Our highest priority must be on consumers, their protection and well-being.
*CPAs and attorneys are exempt. For more detailed information on the regulations, visit the IRS website.
By Dan Fair, Manager of Communications & Member Relations