Regulation of unlicensed tax preparers.

[S T]

Where are you located

RLC,
What state are you in?

Unfortunately, what Jainen states is true. Calif is not really regulating, altho they have been somewhat proactive recently and have closed a few Tax Firms from practicing. During tax season there was one in Rialto (Southern California Inland Empire), and last year they prosecuted another small firm in the Palm Springs Area.

We see plenty here in Calif as I am sure in some other States, H&R Block errors, CPA errors and some returns you just have to wonder about! A few Large firms are currently under investigation and possible prosecution in Orange County.

I don't like testing once I receive a license and I hold several including EA, but maybe that is what all States need, but then again take a look at the fact that there are so many Tax Programs available like Turbo Tax, Tax Cut and others that the "hobbyist" can use to prepare family,friends and neighbors returns and mark the return "self-prepared".

How are we ever going to regulate that! Intuit for example has a huge market as well as HR block. Does the government do anything to regulate that?

Sandy

[Black Bart]

Sea-tax

I am sorry but I have to disagree. You can't have it both ways. You can't be for testing but say because I am a EA it doesn't apply to me or I am from CA so it doesn't apply to me.

I am a licensed series 7 investment rep, I have to continue my education every year as well as take an exam on various subjects to show my knowleedge. My broker dealer requires it and so does the Securities Exchange Comm. and NASD.

I am sorry but I don't thnk you can make exceptions for one and not the other. If you have to take a test every three years then so be it, or don't support the legislation. Unfortunately I have seen many EA's and Cpa's over the years make very careless and simple mistakes. A test is just a test it doesn't replace your working knowledge. If you passed a test 25 years ago that means very little today look how many tax regulations and codes have changed since then.

First things first: Your description of your part of Washington state as "God's country" rang a bell with me. My sister used to write to a lady who lived on an Indian reservation up there (a relatively unkown tribe--don't remember name--not Apaches, etc.) and she described the countryside in the very same words you did, so I guess it must be a pretty nice place. Are there any reservations near you?

On to business: When you say you can't have it both ways (shouldn't test one and not another regardless of credentials), you're talking about "what's fair" rather than "what is." It's true that there are some sloppy/unknowing credentialed people just as there are in uncredentialed ranks, but as it stands now, CPAs, EAs, and attorneys won't be tested and all others (with a few exceptions) will. It doesn't matter whether or not we are "for" it or "support the legislation," because it's being done the way it's being done. I wrote all my congressmen and senators (I was against it) and received the traditional and non-committal reply: "Thanks for your views--we'll keep them in mind." If enough people wrote, it may have had an effect, maybe not--who knows?

Right now, lots of non-CPA state organizations (including mine -- the Arkansas Society of Public Accountants) are jockeying for position by applying for exceptions to the testing requirement. IRS has granted that for three or four states so far and I think they've agreed to look into excepting others if their regs are similar to those of CPAs. I wouldn't be surprised if your broker-dealer and other securities people are interested.

Lots of factors play a part in this: competentcy issues, monetary gain through increased traffic/reduced competition, ethics, concern for public welfare, political PR and gain, and others. Some interested parties are: AICPA, NAEA, NATP, NSTP, all state CPA and non-CPA accountants' groups, congressmen, senators, and independent tax preparer groups.

It boils down to this: Unlicensed (that was me until just a few months ago) preparers and their organizations are against it. That's because, except for a few bold or conscience-driven souls, nobody wants to take a test (especially from now on out) that may put them out of business. You might be a very smart tax preparer indeed, but an incorrect answer can put you in the unemployment line. That's a very chilling thought, which is what drove me to take the EA exam.

Licensed groups are for it. You can decide for yourselves what their motives may be.

For myself, it it does go through, I think the people who pass it should not be required to take it more than once -- just give them CPE like ours from then on. Can you imagine the stress of trying to run a business, trying to plan for next year when you might very well be out of business in the next six months or so? It seems unfair to me.

[OldJack]

Testing should be yearly for all IRS employees.

[Uncle Sam]

Licensing Tax Preparers

There's misconception here.
The test is only an INITIAL test. Thereafter it's CPE for license renewal. It's NOT every licensee must take an exam every 3 years.
The whole purpose is to weed out the unqualified, incompetent, preparers who currently are not Circular 230 practitioners and put them into the same uniform standard of licensing credentials. Studies have shown that those completely unlicensed preparers, do the most unscrupulous acts in preparation to impress the unknowing client "how much money they can save them" without knowing the rules. Now don't get me wrong - licensed practitioners can ALSO commit the same acts - but by somehow regulating the currently unlicensed - there's sanctions that can be taken in disciplining them, that don't currently exist.

[jainen]

everything is a gift

>>people who pass it should not be required to take it more than once<<

I agree (even though it's Black Bart's idea). Once you know the basics, you can just use updates and The Tax Book for any new details you need. There's no way to test for the good stuff, like are you going to assume that a mortgage on vacant land is deductible as investment interest without knowing how the property is used or what the loan was for, or do you report salary the way it actually was instead of the way you think the business owner should ought to have done it, or if you lose money because your particular broker is a crook (as if some other brokers aren't) then you can write off the whole thing the first year, or if your favorite tax advice is to designate everything is a gift.

[Snaggletoof]

Let's Get Serious

If they're going to do this and require a competency test, let's get serious about it. And apply it to ALL preparers.

This means no working under someone else's license. Every preparer has to have their own.

THEN we'll see if H&R Block is so excited about the proposed legislation. Some of their offices would lose 3/4 of their staff!

[Black Bart]

Not likely

If they're going to do this and require a competency test, let's get serious about it. And apply it to ALL preparers.

This means no working under someone else's license. Every preparer has to have their own.

THEN we'll see if H&R Block is so excited about the proposed legislation. Some of their offices would lose 3/4 of their staff!

I don't think there's much chance of that. We (preparers) aren't the only ones with a dog in this fight. The U. S. Treasury has a stake in it too. I don't know what percentage of returns are done by professionals, but I'd guess at least half. If you wiped out about two thirds of those, many tax returns just wouldn't get done and instead of collecting a lesser and incorrect tax as happens quite a bit, they'd collect zero tax on those unfiled returns.

Note to Uncle Sam: I did not know that the bill was now for one initial non-recurring test. When the first bill came out (last year, I think), they were proposing a test be given every year. Then later I heard it had become every third year.

[RLymanC]

Sandy

I'm in Northern CA.

The only thing I'm going on is the fact the every year CTEC of California requires that in order to prepare CA taxes you must register with CTEC. In order to register you must pass a recurrent trainning course each year, and have a $5,000 preparer bond.

The recurrent trainning consists of around 160 question, 90% of them involve federal taxes. The passing dipolma issued by the testing compny is then submitted to CTEC. No person can legally charge for the preparation of CA taxes without being registered with CTEC and have a $5,000.00 surity bond.

Just as in the airline industry, the CTEC recurrent trainning is administered by private enterprise that follows prescribed requirement.

[Unregistered]

The figures as presented by GAO at the Orlando fourm (based on 2002 data) was that 56% of the population used paid preparers. Under $20K AGI was 53% and over $100K was 64%. For 2005 there were 68.5 million individual returns filed.

[veritas]

I would hope that our industry could regulate itself. We don't need another state or federal agency. Homeland security=joke
Post ofiice=joke AMTRAK=joke FEMA=Joke IRS=JOKE DMV=JOKE Public Education=Joke Dept of Commerce=joke Medicare=joke

Need I go on?

[sea-tax]

BB Yes there are many different reservations near me , most notably the Muckleshoot and Tulalip tribes. Both do real well with their casinos.

[sea-tax]

>>people who pass it should not be required to take it more than once<<

I agree (even though it's Black Bart's idea). Once you know the basics, you can just use updates and The Tax Book for any new details you need. There's no way to test for the good stuff, like are you going to assume that a mortgage on vacant land is deductible as investment interest without knowing how the property is used or what the loan was for, or do you report salary the way it actually was instead of the way you think the business owner should ought to have done it, or if you lose money because your particular broker is a crook (as if some other brokers aren't) then you can write off the whole thing the first year, or if your favorite tax advice is to designate everything is a gift.

Jainen- what do you mean by this statement. "or if you loose money because your particular broker is a crook(as if some brokers aren't)"? It sounds like you are personally condeming what some of us on this board do to earn a living. I am asking for a clarification to that statement because sometimes on chats a little can be lost in translation. If your intention was to say that all brokers are crooks then I as well as others may take some exception to that.

[jainen]

take some exception

>>I as well as others may take some exception to that<<

Don't get in a bunch, it's only an Internet forum. You come here for different viewpoints, don't you? There was nothing personal in the object of my tirade--note my use of the subjunctive.

It's a free country and I can hold and express any bigoted opinion I want. You are equally free to take exception. The problem would be if improper attitudes led to improper actions, but they aren't.

In my personal opinion, financial services is an inherently dishonest industry.

-

[veritas]

You are correct

In that the industry is inherently dishonest. That is why Sea-Tax and I are licensed so we can change the industry from within.

[sea-tax]

>>I as well as others may take some exception to that<<

Don't get in a bunch, it's only an Internet forum. You come here for different viewpoints, don't you? There was nothing personal in the object of my tirade--note my use of the subjunctive.

It's a free country and I can hold and express any bigoted opinion I want. You are equally free to take exception. The problem would be if improper attitudes led to improper actions, but they aren't.

In my personal opinion, financial services is an inherently dishonest industry.

-

Jainen
Your are right it is a free country and that is what I love about it. What a I take exception to is that I must share it with ignorant people , who profess to know everything about everything.
Furthermore I would love to hear your explanation on how the financial services industry is inherently dishonest. You seem to know everything , why don't you educate me on the subject.
You say nothing personal, but when you attack an industry which I am apart of it becomes personal. I think you are from CA, Jainen. What would you say if I said all people from CA are pretentious asses ! I don't subscribe to that idea ,but what if? How would you feel?If you are not from CA them sub in where ever you are from.

Jainen here is a little lesson, when ever you start a sentence with "nothing personal" it just became personal.