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IRS Considers License For Tax Preparers

Government losing billions through fraud and incompetence

June 5, 2009

The reason? The tax collection agency thinks the government is losing billions of dollars through fraud and incompetence. Shulman says the agency wants to increase taxpayer compliance and ensure uniform and high ethical standards of conduct for tax preparers.

The commissioner, in testimony before a House Ways and Means subcommittee, said he will submit recommendations to the Treasury Secretary and the President by the end of the year.

“Tax return preparers help Americans with one of their biggest financial transactions each year. We must ensure that all preparers are ethical, provide good service and are qualified,” Shulman said. “At the end the day, tax preparers and the associated industry must be part of our overall game plan to strengthen the integrity of the tax system.”

Shulman said the first part of the effort will involve fact finding and receiving input from a large and diverse constituent community that includes those that are licensed by state and federal authorities — such as enrolled agents, lawyers and accountants — as well as unlicensed tax preparers and software vendors. The effort will also seek input with consumer groups and taxpayers.

“We plan to have a transparent and open dialogue about the issues,” Shulman said. “At this early and critical stage of the process, we need to hear from the broadest possible range of stakeholders.”

Rep. John Lewis (D-GA), chairman of the subcommittee, expressed general support for the idea of licensing tax preparers, saying the problem of fly-by-night tax preparation, as well as outright fraud, was a problem in many low-income communities.

Later this year, the IRS plans to hold a number of open meetings in Washington and around the country with constituent groups.

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