Senate Bill 832 - Federal Licensing of Tax Preparers
Once again in 2005 there is a bill in Congress that will require the
Department of Treasurey to examin and license anyone who is paid for
preparing a federal tax return. This is already required in a handful
of states, including California.
It is way too early to predict what the final form or impact of the
"Taxpayer Protection and Assistance Act of 2005"
will be.
In general licensing is considered a good thing, as in some areas there
are many people selling this service who are not competent.
However, demonstrating that one is competent at one point in time does
not necessarily prove them to be competent at a latter point in time.
It is likely that continuing education would be required, but to date
all such course work requires attendance, not proficiency.
What this does not address is the situation where the preparer knows
tax laws sufficently well to assist most individuals, but whose scrupples
are not high enough to protect the integrity of the system. Our tax
system is built on the concept of self-reporting, with limited cross-checking
to ensure compliance. Unfortunately, there are plenty of preparers around
who are not honest and willing to cheat in numerous ways to inflate a taxpayer's
refund in order to sell their service. Then when the taxpayer gets caught
the preparer is nowhere to be found.
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