Saturday, July 29, 2006

IRS Plans to Make Public Allegations Against Practitioners Met with Strong Resistance

IRS proposals to announce legal actions against tax preparers prior to completion have strong opposition from the tax professional community. The Wall Street Journal reported Tuesday that present proposals would publicly list preparers who are under investigation. The proposal, said to focus on preparers who are "incompetent," "disreputable" or involved in bogus tax shelters; drew the following complaint from Tom Ohlsenschlager of the AICPA: "You can imagine what would happen if a particular CPA is being charged with an infraction. Clients probably wouldn't go to him. Our professional reputation is all we have to sell." The IRS countered by saying that opening up the sanction process might help other tax preparers from repeating the mistake. An additional part of the present proposal would be to limit contingent fee engagements to cases where the IRS formally audited or challenged the return.

While acknowledging that the IRS's "teaching moment" concept is somewhat valid; privacy rights have become VERY important in the U. S. over the last 30-40 years and the IRS has not convinced me that they have more rights than prosecutors in criminal cases or plantiff attorneys in civil cases to indiscriminately drag a taxpayer's or tax preparer's reputation through the mud prior to resolution. If a way can be found to disclose examples of wrongdoing with reasonable levels of protection of anonymity, fine; otherwise, the proposed standards appear to do more harm than good.


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