IRS wants tax preparers to be licensed and regulated
If IRS Commissioner Doug Shulman has his way there will soon be another layer of government added to an already bloated IRS by regulating and licensing all tax preparers. He says that this will help reduce mistakes and combat fraud. Shulman goes on to say, "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." Apparently the private sector is incapable of providing this service with integrity so government intervention is mandated.
According to a story carried on Breitbart.com, "From 2006 through 2008, the IRS initiated
more than 600 investigations of fraud among tax preparers. During that
time, 356 tax preparers were convicted, with more than 80 percent of
them sentenced to prison, home confinement or electronic monitoring." This breaks down to about 200 investigations a year, with a little over a 50% conviction rate. This merits sweeping reforms and such drastic changes?
The government is apparently now tacitly admitting the taxes are so cumbersome and difficult to manage, anyone doing so requires special training and licensing in order to do it effectively. Eighty percent of taxpayers get help with
their returns, either from paid preparers or computer programs, Shulman
told a congressional subcommittee. A more practical solution would perhaps be to simplify the tax code and the filing process through the passage of the Fair Tax, Flat Tax, or a national sales tax.
The expenses involved in this program will of course be high, but think of the infrastructure which will pop up to support the licensing scheme. Study materials for the test, license "camps", testing centers, storage of results and managing the databases will all of course have to be provided by someone. The new bureaucracy will need to update the standards every year, publish these standards, create the tests and disseminate them to the testing centers prior to the start of the tax year. They will have to get these results back to the licensing authority for issuance to the tax preparers before the tax year. I doubt they can do it.
Who pays for this? The taxpayer of course. We will pay the governments portion through a higher budget for the IRS and pay the tax preparers portion through higher rates. As they will be tested and licensed, tax preparers will now be able to ask for even higher rates in addition to passing along the costs associated with testing and licensing. If taxpayers wanted to pay the rates we would probably see , they would pay for a CPA to do their taxes. At this point, nothing has been said about individuals preparing their own taxes, but under the current administration, can anyone doubt it will show up on the table for discussion? I wonder how this will affect on-line or tax applications (such as Turbo Tax)?
Who would write the new standards and tests for licensing? The very agency who has trouble answering questions about their own tax forms; the IRS. Even they don't trust their documents as evidenced by the extract from The Internal Revenue Manual 4.10.7.2.8
(01-01-2006) IRS Publications: IRS Publications explain the law in plain language for taxpayers and
their advisers. They typically highlight changes in the law, provide examples
illustrating Service positions, and include worksheets. Publications are nonbinding
on the Service and do not necessarily cover all positions for a given issue.
While a good source of general information, publications should not be cited
to sustain a position. Unfortunately,
the IRS is not bound by answers or positions stated by its employees
orally, whether in person or by telephone. According to the
procedural regulations, 'oral advice is advisory only and the IRS is
not bound to recognize it in the examination of the taxpayer's
return.'
According to a story carried by the AP IRS Workers Mistaken Almost Half the Time (September 3, 2003), "IRS centers established to help people prepare their tax returns
gave incorrect answers - or no answer at all - to 43 percent of the
questions asked by Treasury Department investigators posing as
taxpayers. Auditors were given correct answers to 57 percent of their tax law
questions during the course of the study. Less than half, or 45
percent, of the questions were answered correctly and completely. In 12
percent of the cases, the answer was correct but incomplete. The IRS disputed the results. Using the raw numbers gathered by
Treasury investigators, the IRS recalculated the error rate and ignored
any instance when a taxpayer was denied service or told to do his own
research. Of the questions answered, they calculated that 67 percent
were answered accurately. The IRS hopes to improve its track record and answer 80 percent of
the questions correctly this year, and 85 percent correctly next year." An accuracy rate of 67% and hoping for an accuracy rate of 85%? And the IRS is to write the standards and tests for tax preparers? Will the IRS reps have to qualify?
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Thanks for share good source
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Thanks for share good source
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