IRS errors

WASHINGTON — The Internal Revenue Service wants to start regulating paid tax preparers used by more than half the nation’s taxpayers in an effort to reduce fraud and errors.

New rules could require education and training as well as licensing for people who get paid to prepare returns, IRS Commissioner Doug Shulman said Thursday.

"In most states, anyone can charge to prepare tax returns regardless of training, education, experience, skill, licensing or registration,” Shulman told reporters. "Virtually anyone can set up a tax return business.”

Shulman said most tax preparers provide quality work, but some are poorly trained or unscrupulous.

The IRS, however, can’t say how many fall into either group because the agency doesn’t track how many complaints are filed against tax preparers or their outcomes, according to a report issued in February by the Treasury Inspector General for Tax Administration.


The problem’s scope
The IRS doesn’t even know how many individuals or companies prepare returns for taxpayers, Shulman acknowledged.
But when the IRS detects a fraudulent return, it’s the taxpayer — not the tax preparer — who must pay the additional taxes, interest and any penalties, according to the IRS.

Shulman said he will seek suggestions for new rules from the industry and consumer groups before making his proposals to President Barack Obama and Treasury Secretary Timothy Geithner 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.”

Shulman said new rules would give him better leverage to make sure tax preparers act ethically, not only to improve enforcement, but to ensure taxpayers get quality help in preparing their returns.

"When people pay good money, they should not get bad advice,” he said.

About 60 percent of taxpayers pay someone to prepare their returns, Shulman said. An additional 20 percent or so buy computer software. However, tax preparers don’t have to be licensed, unless they represent clients in proceedings before the Internal Revenue Service.

Industry giant H&R Block and several members of Congress welcomed Shulman’s initiative.

"We believe that all tax assistance providers should be trained and licensed as necessary,” said Richard C. Breeden, chairman of H&R Block.



by the associated press