This page contains a single entry from the blog posted on January 22, 2013 4:56 PM. The previous post in this blog was Streetcar lemon guy gets deal for Admiral Randy Memorial Boathouse. The next post in this blog is They hate it when you record them. Many more can be found on the main index page or by looking through the archives.

E-mail, Feeds, 'n' Stuff

Tuesday, January 22, 2013

IRS gets H & R Blocked

Do the people who fill out tax returns for a living need to have a license to do so? Here in Oregon, they do, but in most states they don't. The federal Internal Revenue Service recently announced that it was about to start a national licensing program, and it got pretty far down the road of setting it up -- until last week. That was when a federal judge in Washington, D.C. ruled that the IRS doesn't have the power to do that under current law.

Now the IRS has backed off while it figures out what to do next. One thing it could do is ask Congress for the authority it needs. Maybe it's afraid Congress will say no. We support some sort of testing for minimum competency before sending somebody out there to take other people's money to prepare their tax forms. Even more, we support simplification of the tax laws so that such help isn't needed in most cases.

Comments (10)

Used one of those IRS licensed agents hoping to take the stress out of the process, but I ended up having to do my own research on several matters to tell him what to do. He got all confused on wash sales and insisted on delaying filing until he received documentation that was neither required nor logically necessary. In addition, on a timeliness of payment issue that I knew I needed some help on, his approach was to file and see if the return was kicked back. Now I am back to complete self-help, concluding the licensing process is pretty much meaningless.

Thanks Prof Jack for this post.

"Even more, we support simplification of the tax laws so that such help isn't needed in most cases."

It is a fundamentally flawed system that demands every single citizen obey a law so complicated that he can't comply without the assistance of a paid professional.

If it survives appeal, it seems like an indictment of former Commissioner Shulman's stewardship of the Service. Which is kind of a knee-jerk reaction.

Thinking about it, TPA Nina Olsen has been asking congress for regulation of non-professional preparers for a decade. And congress has dutifully given her the finger. Enter Shulman who tries to get something done to stem rampant fraud and low quality work product in the non-professional markets. Spends two plus years and a kings ransom to design and implement a national system only to have it yanked away by a federal judge on the eve of its full effect.

All you can do is sigh and move on. Congress cares not about the US tax system. I would be pleasantly shocked if it would act to save Shulman's work and the only TPA Annual Report line item to have been addressed in recent memory.

For those of you non-tax-types out there, Will is referring to the Taxpayer Advocate -- an ombudsperson in the Treasury Department watching over the IRS.

Here's some reality for you. To prepare taxes in-season for a few extra bucks, I had to (1) work under a licensed tax consultant (thereby limiting my pay to what said consultant would let me have) and (2) pay out approx $600 each year for state and federal license fees and continuing education costs (which, if done honestly, took a better part of week out of my life each year). All this for a couple thousand dollars in W-2 wages? No thanks.

Continuing education is an investment, not a cost. The fact that you choose not to discern the two virtually guarantees you are not a fit for the profession.

I would recommend financial planning where you can blame your lack of perfect professional execution on the whims of the market and do not have to sign under penalty of perjury 300 times a year.

Every year I sign and hope my CPA knows what he is doing.
So far so good....but who knows? Not me that's for sure!

All licensing does is limit the competition. It has nothing to do with quality or protecting the consumer. It is another scam!

What Evergreen Libertarian said.

I had used three of the national CPA firms, the largest regional firms, a good size local firm. All of them did my business and personal taxes wrong. I only found out when I took Prof Bog's Partnership law class! When I started asking my then CPA questions about our taxes based on what I learned in that class, they started blaming the predecessor CPA firms and clammed up right away. Shortly after, they sent all our records back to us. Never heard from them again! My wife took the EA and Oregon Tax Consultant exam and has been doing our own taxes since.

Block and the other biggies are staying closelipped but they're salivating at the prospect of locking out smaller competitors. Fees and training costs are a lot less when spread over the number of returns those guys do. Picking up a return that a mom and pop otherwise would have done will bring them more revenue on net.

The problem of shoddy preparation could be fixed in a heartbeat if liability rested with the preparer instead of the taxpayer. Or Jack's last sentence, which should be the ultimate goal.

Clicky Web Analytics