TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, October 15, 2013

The Constitutionality of Regulation of Tax Return Preparers

RTRPAriel Alvarez (Montclair State University), The Constitutionality of the Inevitable Regulations of All Tax Return Preparers, 14 J. Accounting, Ethics & Pub. Pol'y Policy 735 (2013):

Complying with the labyrinthine federal tax code is a complicated business. Each year millions of Americans must present to the IRS a sincere and accurate statement of their income, applicable deductions and exemptions, and the total tax owed or refund claimed. Failure to do so potentially results in stringent and expensive penalties. Thus, it is reasonable to expect that the professionals or other individuals who assist these millions of Americans in preparing their tax returns be knowledgeable, careful and honest. However, studies show that many tax return preparers are operating outside an acceptable standard of professional responsibility. Although the IRS maintains strict regulation of certain kinds of tax preparers via the famous “Circular 230,” until recently a large industry of unregistered tax preparers has operated largely unrestricted. This paper examines the contextual evolution of the IRS’s regulation of unregistered tax preparers, including its historical exercise of judicial and statutory remedies, the extension in 2011 of Circular 230’s application to all tax return preparers and the objections to regulation raised by some unregistered tax preparers and their supporters. In light of the strong arguments in favor of regulation, this paper concludes that the IRS’s ultimate regulation of all tax return preparers is basically inevitable.

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