Wait a second. Aren’t tax preparers regulated?
Well, sort of. All tax preparers fall under the aegis of Circular 230. If your tax preparer is an Enrolled Agent (EA) (what I am), a Certified Public Accountant (CPA), or an attorney, they can practice fully before the IRS. (Not all CPAs or attorneys are tax practitioners.) If you go to H&R Block, for example, it’s quite possible that the person preparing your return is someone trained by H&R Block and has what is called limited practice. In general, you get what you pay for.
Two states currently regulate professional preparers: California and Oregon. In California, any professional tax preparer who is not an EA, CPA, or an attorney must register with the California Tax Education Council (CTEC), or face fines. Preparers become “California Registered Tax Preparers” (CRTP) by taking a 60-hour course, obtaining a bond, and paying a small fee. Although this program has been in place for a few years, the California Legislature just passed legislation that puts some teeth into the program: CTEC now has funding to go after unregistered preparers and fine them.
This past year legislation was introduced in Congress that would require all professional tax preparers in the US to be registered. An exam would have to be passed, continuing education would be required, and fees would be paid. The legislation was generally supported by the National Association of Enrolled Agents (NAEA), the American Institute of Certified Public Accountants, the American Bar Association, and the National Taxpayer Advocate. The legislation is still active, but has not passed the House of Representatives.
Personally, I have mixed feelings about regulating all preparers. Some of the best advertising for professionals such as myself are the errors and frauds committed by the like of Western Tax Service. In general, you get what you pay for in life. Additionally, such a program would require either increased funding for the current Circular 230 (Office of Professional Responsibility) staff, or a new bureaucracy, just what we need in Washington.