IRS to seek more regulation of tax preparers

The IRS is working on new rules that could require paid tax preparers to be licensed to improve tax compliance and reduce fraud, IRS Commissioner Doug Shulman announced today.

Eighty percent of taxpayers get help with their returns, either from paid preparers or computer programs, Shulman told a congressional subcommittee. Tax preparers currently don’t have to be licensed, unless they represent clients in proceedings before the Internal Revenue Service.

Shulman said he wants better leverage to make sure tax preparers act ethically, not only to improve enforcement, but to ensure that taxpayers get quality help in preparing their returns.

“Paying taxes is one of the largest financial transactions individual Americans have each year, and we need to make sure that professionals who serve them are ethical and ensure the right amount of tax is paid,” Shulman told the House Ways and Means Subcommittee on Oversight.

Shulman said he will seek input from the industry before making his proposals to President Barack Obama by the end of the year. The proposals could include new regulations or laws.

“I want to enter this with an open mind,” Shulman said. “For me, everything’s on the table.”

Rep. Xavier Becerra, D-Calif., welcomed Shulman’s announcement, saying professional tax preparers should be required to show competency.

“All sorts of people are being paid” to prepare taxes, Bacerra said. “There’s no clear standard.”

Under questioning from Becerra, Shulman acknowledged the IRS doesn’t even know how many individuals or companies prepare returns for taxpayers.