Tax preparers fret over first U.S. IRS fees, rules

[AZ-Tax]

http://news.yahoo.com/tax-preparers-fret-over-first-irs-fees-rules-104841162.html

[FEDUKE404]

To be handled how?

I'm curious as to how the big firms (Block, J Hewitt, Liberty) will deal with these costs for their employees.

One would think the firms might be a bit more selective on the folks they hire and also avoid the automatons that get a quickie tax prep course, work through the Jan/early Feb rush, and then disappear into the darkness.

FE

[Jiggers]

No different than our costs for EA renewal, PTIN fee, and CPE with the related travel. I pass all of that on to my clients. Don't you?

[WhiteOleander]

Hair dressers, car mechanics, electricians, plumbers, etc, pass their costs on to me. Why are they up in arms about this?

[JohnH]

Maybe they're actually helping us by ginning up conversation about it. Heightened publicity raises awareness and reinforces the idea that we need to raise our fees more than usual in 2012. When we notify clients about fee increases, more of them will respond that they had already seen this in the media and it was expected.

Plus, we can blame it on the government - everybody understands that logic.

[superman]

Just a thought

Most people that look at this as a true profession already do the education so I do not see that drastic of a change. I am now doing the EA test so I will not have to do the other test. When a client ask about my fees I still tell them my cost is less then the big chains and I pay for all of my own education.

It is all about doing business and there are fees for everyone in business. I see the only people it may affect are the fly by the night guys anyways and that just help the rest us out.

Superman

[taxmom34]

there's a problem "with the fly by night guys" because this will not affect them at all, they will use turbo tax and still not sign the return.

[erchess]

What the IRS Could Do

The IRS runs messages educating the public about the EIC. Instead or in addition they could run messages to the effect that if you pay someone to do your return they need to sign something and give you a copy. If they don't they are not on the up and up. We cannot totally eliminate people who always choose the cheapest preparer or who intentionally choose a dishonest preparer. But the IRS could prevent people from ignorantly going to such preparers.

I don't know how close the IRS is to doing this, but it would be desirable if the IRS could track the number of total returns anyone does and out of that number how many contain errors. Then it would be possible to zero in on those with overly high percentages of problematic returns. I recall being stunned several years ago when I found out that an auditor working on a given return has no access to information about the number of returns or the number of erroneous returns this preparer has generated.

[DonPriebe]

... I don't know how close the IRS is to doing this, but it would be desirable if the IRS could track the number of total returns anyone does and out of that number how many contain errors. Then it would be possible to zero in on those with overly high percentages of problematic returns. ...

I know that they can do this for the volunteer (VITA, TCE) sites because we get feedback the next season. But the "errors" they track are defined as e-files that are not accepted on the first submission. So correctly claiming a dependent that someone else has already incorrectly claimed is an error, while omitting a handful of W2Gs is not.

[lenboush]

I know that they can do this for the volunteer (VITA, TCE) sites because we get feedback the next season. But the "errors" they track are defined as e-files that are not accepted on the first submission. So correctly claiming a dependent that someone else has already incorrectly claimed is an error, while omitting a handful of W2Gs is not.

This is done for ALL preparers.

[Nashville]

Trojan Horse

I sound like a broken record, but I've been warning preparers that govt regulation is a Trojan Horse. Now they see a revenue stream, and will increase it. The bad preparers that this is supposed to "weed out?" They'll still be around.

Remember the Patriot Act? Now that it's 10 years old, has it even made a dent in illegal immigration? Hispanics can open an account at BOA with virtually NO evidence of citizenship, but if you and I want to open an account, the bank first has to draw blood, and of course they blame the Patriot Act.

The founder of Liberty Tax service has stated that if regulation follows the trend set in other industries, it will tend to drive small practitioners out of business and thus benefit large companies. Instead of becoming irate with him, we need to first ask ourselves if he is simply just telling the truth.

What happens in other industries is the smaller companies that attempt to comply with regulations actually give the regulators a database of "low hanging fruit" that they can pursue with pincushion-like fees, while the larger companies, armed with a bevy of lawyers and resources to make life less productive for the regulators, get a free pass. They are not "low hanging fruit" and become not worthwhile for regulators to puruse. The regulators will not go after the "fly-by-night" people either - too much trouble to gather information that they haven't provided. If you don't think this will happen in our industry, just wait a few more years. Regulation is just now in its infancy.

[Peachie]

I agree

with much of what you say Nashville. This is what I've thought since all of this started.

Peachie

[veritas]

Crony Capitalism

is alive and well.

[Koss]

Pros and Cons of Regulation

I certainly agree that too much government regulation, in any context, is not a good thing. And I am also strongly opposed to most provisions of the Patriot Act.

But comparing the regulation of tax pros to the Patriot Act is a bit of a stretch.

Suppose you were a properly trained and licensed dentist. How would you feel if your patients could go to some other "practitioner," with no license, no regulation, and no oversight, just to have their teeth cleaned?

Why do they need a license or regulatory scheme? They are not providing treatment of any illness or disorder. They are merely performing a prophylactic cleaning. Anyone can learn to do this in about six weeks.

Preparing tax returns is not much different.

The road to hell is paved with good intentions. And the evolving regulatory scheme certainly has a downside to it. But in some sense it will in fact level the playing field.

CPAs and enrolled agents have had to deal with a fair amount of regulatory baggage for quite a while now. In fact, I'm pretty sure that the regulatory burden for CPA licensure is much more onerous than that of enrolled agents. Nevertheless, CPAs and enrolled agents appear to be thriving in small private practices. I see no reason why tax pros cannot do the same.

It will not drive the unlicensed completely out of business. But I do think it will raise public awareness of the fact that this is a licensed profession.

How far back in time do you have to go to reach a point where the practice of medicine was not licensed and regulated? Pretty far back. I haven't looked it up. But in the western world, physicians and other health care practitioners have been licensed and regulated for hundreds of years. The regulation of other professions, that do not fall within the scope of health care, is more recent. In some states, the practice of law and accounting was not really regulated until about 50 or 75 years ago. If you go back 150 to 200 years, lawyers were educated as apprentices. There were no law schools, and the government did not prevent a person without a license from representing another person in court.

Society has decided that medicine, dentistry, law and accounting should be regulated and licensed. Why? Because an unlicensed person can do serious harm to the client if they do not know what they are doing.

There is a difference between the unlicensed practice of medicine and the unlicensed practice of law. An unlicensed doctor is messing around with your body. A serious mistake may cause severe injury or death. This cannot be said of law and accounting. But many would argue that the degree of potential harm is the same.

I don't agree with the entire mechanism for licensing and regulation of lawyers and accountants. But we are probably better off with it than without it.

BMK

[joanmcq]

Bravo, Koss! I couldn't have said it better. And yes, there are a lot of small and sole practitioner CPAs and EAs (of which I am one) that are making our own ways in the world.

I don't go to Hewitt for high level tax advice. And I certainly don't use Liberty as a business model to emulate!