Thursday, August 26, 2010
The IRS is out to do something nice for us by ensuring we get quality help when we hire someone to prepare our tax returns. Unfortunately, parts of this laudable effort may be too much of a good thing. By going too far, too fast with more regulation than necessary, the IRS will add needless burden and expense. The agency's goals could be achieved more cheaply and efficiently without stretching its enforcement resources so thin.
Tax attorneys, certified public accountants (CPAs) and enrolled agents already are subject to extensive oversight and testing at both the state and federal levels. But a vast army of others operate with little federal or state supervision and may have little formal training. No independent cop on the beat protects taxpayers from the unprepared preparer. The proposed registration program would bring unregulated preparers within reach of the IRS, enabling it to identify those with a pattern of shoddy work, and, if necessary, act to protect taxpayers. That's the good news.
But the effort is flawed by plans to apply it too widely—going beyond the "signing preparer" (the person who directs and reviews the work and then signs the return) to basically every person who may touch a return.
This approach could require more than a million registrations nationwide, including legions of "nonsigning preparers" at CPA firms that are already subject to intense scrutiny and penalties by state accountancy boards and the IRS. Requiring a PTIN for nonsigners is regulatory duplication that will create volumes of additional paperwork and expense to be passed onto taxpayers—without providing any added protection.