Yet More Evidence Paid Preparer Regulations Are Necessary (and Working)
A few months ago, in response to a lawsuit to stop regulations for paid tax preparers, we reiterated our support for new rules requiring them to pass a competency exam and participate in continuing education.
To re-reiterate: Like everyone else, low-income filers deserve access to high-quality service when meeting their tax obligations. Mistakes on the tax returns of low-income taxpayers can cost them hundreds or thousands of dollars, immediately or further down the road.
But there’s even more at stake.
As new stories of paid preparer fraud roll in, we hear the tale we’ve grown all too accustomed to hearing: The preparer promises a big refund and does so by falsely claiming the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC) or both.
Tax preparation being what it is (complicated), clients often have no idea this is happening. But naturally they’re pleased with the refund.
Such fraud is threatening the otherwise outstanding reputation – and even the existence – of the EITC and CTC. These undeniably successful credits are being attacked based not on ineffectiveness, but on stories of abuse – abuse by paid preparers with the financial incentive of boosting their fees by increasing the tax refunds for which they file.
With the debate over proposed policies to severely restrict the Additional Child Tax Credit raging, stories like this only fuel the fire.
Bizarrely, the policies being proposed target not the preparers committing the fraud, but the often-unwitting taxpayers involved (and their kids).
Any questions about handling EITC or CTC fraud must first take into account the paid preparer regulations still being implemented. These rules encourage competency among preparers in general and assist in tracking the bad apples of the tax preparation industry.
And more importantly, they help protect the integrity and effectiveness of crucial policies like the EITC and CTC.
By Dan Fair, Manager of Communications & Member Relations