Taxation & Estate Planning

Group to Sue IRS for Regulating Tax Preparers

By Darrin Mish

Group to Sue IRS for Regulating Tax Preparers

The Institute for Justice, based in Arlington, Virginia, plans to sue the IRS for regulating tax preparers. The non-profit organization, whose mission is to protect individual liberties, believes that the action of regulating tax preparers is unlawful.

The IRS regulations for tax preparers requires them to be registered and be given a Preparer Tax Identification Number (PTIN) besides undergoing continuous education in the form of mandatory tests to be kept abreast of tax developments. These requirements are to be implemented in stages over the next few years. Last week, those who sat for tests were given their results and received their certificates and PTINs as tax preparers.

On the other hand, the IRS believes that by regulating tax preparers, they are helping tax preparers become more competent in their work and reducing tax fraud. Last November, IRS Commissioner Doug Shulman said, ?Boiled down to its essence, the program will ensure a basic level of competency for return preparers while enabling us to focus on finding unscrupulous preparers.?

But an attorney for the Institute for Justice said, ?(The IRS are) wildly overextending their actual authority granted by Congress,? and believes the regulations only benefit the CPAs, tax attorneys, enrolled agents and large tax preparer companies like H&R Block who are either exempted from certain regulations or have many tax preparers working for them, thus enjoying economies of scale that give them a huge advantage over individual tax preparers.
The Institute believes that the objectives of making tax preparers more competent and diminishing tax fraud can be achieved through other means. For example, the IRS could enforce other tax preparer registration rules that that will not be challenged by lawsuits and enforce existing penalties for tax fraud and other wrongdoing.

Other interest groups, however, have no problems with the IRS regulations. The vice president for taxation at the certified public accountants group, Edward Karl, commented that accountants and other professionals already have to undergo extensive testing and comply with continuing education standards. He said, ?I do understand why folks who have done this for years and feel that they?re competent don?t want to change.?

The IRS would not make any comments on this issue as the lawsuit by the Institute is pending.

Group to Sue IRS for Regulating Tax Preparers is a post from: IRS Tax Problem Solver Blog - IRS Help

Full post as published by IRS Problem Solver Blog on March 13, 2012 (boomark / email).