President's Budget Includes Oversight of Paid Preparers
On May 23, the president released his budget blueprint. The blueprint maintains a proposal from the Obama administration regarding tax preparer regulation.
The proposal would give the Treasury Secretary the authority to regulate paid tax return preparers. Tax return preparer regulation has been a hot topic of discussion since the RTRP program was suspended in January 2013.
budget proposal contains the following text regarding the regulation of tax return preparers:
“Increase oversight of paid tax return preparers. — Paid tax return preparers have an important role in tax administration because they assist taxpayers in complying with their obligations under the tax laws. Incompetent and dishonest tax return preparers increase collection costs, reduce revenues, disadvantage taxpayers by potentially subjecting them to penalties and interest as a result of incorrect returns, and undermine confidence in the tax system. To promote high quality services from paid tax return preparers, the proposal would explicitly provide that the Secretary of the Treasury has the authority to regulate all paid tax return preparers. This proposal would be effective as of the date of enactment.”
What These Changes Could Mean for You
Tax return preparer regulation has been a large topic of discussion since the RTRP program was suspended in January 2013. Taxpayer Advocate Nina E. Olson has been vocal in her belief that all tax return preparers should be regulated. In a written statement before the Committee on Finance US Senate from April 2014, Olson stated, “Taxpayers must be confident that federal tax preparers meet basic standards of expertise and competence, and that these standards are maintained over time.”
Director of IRS Return Preparer Office Carol A. Campbell and IRS Commissioner John A. Koskinen have also been proponents of tax return preparer regulation. At the IRS Tax Forum in Chicago on July 12, 2016, Koskinen stated, “It's important to remember that Enrolled Agents are one of only three groups—along with CPAs and attorneys—that are allowed full representation of their clients before the IRS. The ability to represent taxpayers during tax audits or in collection matters is a valuable service, not only to the affected taxpayer, but to us as well. The IRS also benefits when taxpayers have competent representatives to help guide them through options for resolving difficult tax matters.”
Due to such overwhelming support of tax return preparer regulation from the IRS and both political parties, the fact that this proposal has been maintained on the current administration’s budget blueprint is not surprising. Though there is no guarantee as to what may ultimately happen as a result of the proposal, it is absolutely vital to stay informed on what a potential change to tax preparer regulation could mean for you. We are here to keep you updated.