Olson: Don't Look for Mercy Here, Scofflaw Tax Preparers

In her annual report to Congress, Taxpayer Advocate Nina Olson said that she would work with the Inspector General for Tax Administration to develop regulations for presently unregulated (commercial preparers who are not attorneys, CPAs or enrolled agents) tax preparers. Olson scolded these preparers for inaccuracy, lack of sufficient diligence and even taking unreasonable positions. She asked that unregulated preparers should be tested and required to take continuing education (in effect, requiring something comparable to enrolled agent status before being permitted to prepare tax returns commercially) and that unregualted preparers who are regularly sloppy or overly aggressive should be pursued by IRS enforcement officals. She also advocated a specific identification number, similar to an employer number, for commercial tax preparers. Additional priorities include additional study (and potentially increased access to) the offer-in-compromise program, better administration of refundable credits and better telephone service to taxpayers.

I certainly have no quibble with the additional priorities and Ms. Olson has earned the right to be taken seriously when it comes to her support of regulation for tax preparers. There is a theoretical argument for letting states regulate non-ABA/CPA/EA tax preparers; there is also a "interstate commerce/tax gap" justification for increased federal regulation. One of my biggest fears for increasing federal regulation, brought out in a previous post, is that regulation initially claimed to be directly at unregulated preparers would be used to leverage additional regulation of EAs and CPAs, a scenario which I DEFINITELY would not support. Ultimately, in my opinion, Congress needs to make it clear whether only EAs, CPAs and attorneys should be permitted to be commercial tax preparers before the proposed IRS regulations are put into place; in other words, the legislative body should speak before the administrative/executive body regulates.