Regulation

[Beersheba]

Outgrowth of the Thread "Drake Software." Totally new subject, so I think it appropriate to begin a new thread.


Originally posted by Rapid Robert View Post
[I]"I wonder if things would change if Congress gave the IRS authority to regulate paid tax preparers?

This idea has been around for awhile and it has all the usual support from purists. Supporters believe this would put "Shifty-Eyed Sam across town" out of business and stop him from cheating on behalf of his clients and charging them a hefty fee for this.

I don't want regulation. No I don't like Shifty-Eyed Sam better than anyone else.

In all industries where regulation exists, there is selective enforcement. The huge Fortune 500 companies are the big supporters of regulation and in fact sometimes lobby Congress to pass it. What happens is the gov't employs more bureaucrats to track and enforce the regulations, but they seldom, if ever, bring charges against the big companies. The big companies look at regulation as a means to eliminate competition from smaller, well-run companies.

Regulation of tax preparers would firstly NOT stop people from preparing their own returns and manipulating their own refunds. What would happen would be a gallery of govt employees working for the IRS would descend on small-shop tax preparers and look for trifling violations to assess penalties and ding people like ourselves - potentially putting us out of business. Part of the funding for this gallery of enforcers would come from the assessment of penalties and interest, so there would be every reason to assess them to enhance the future of their own jobs with raises and promotions.

But when they knock on the door of the large firms, they would be met, given a cup of coffee, and told "Thank you for stopping by. Our lawyers will be in touch." The enforcers would then quietly walk away. End of story.

[RWG1950]

I have always felt that a paid tax preparer should have at least a minimal competency at what he/she does and be able to demonstrate this
on a periodic basis - maybe test every 10 years or so. Thought the RTRP test of about 12 years ago was a good idea.
Too bad the lobbyists managed to get rid of it. Also thought it was a shame to have driven 200 miles to take the RTRP test, consuming
most of a day, only to have all of this later deemed it unnecessary.

[New York Enrolled Agent]

I have always felt that a paid tax preparer should have at least a minimal competency at what he/she does and be able to demonstrate this
on a periodic basis - maybe test every 10 years or so. Thought the RTRP test of about 12 years ago was a good idea.
Too bad the lobbyists managed to get rid of it. Also thought it was a shame to have driven 200 miles to take the RTRP test, consuming
most of a day, only to have all of this later deemed it unnecessary.

Too bad the lobbyists managed to get rid of it

There is nothing wrong having an opinion on tax matters but you can't let the facts get in your way. The regulation (or action) you apparently reference was held invalid by a U.S. District Court Judge. That's how it was "get rid of it". The decision was upheld by the DC Circuit of Appeals (one of the judges is currently Justice Brett Kavanaugh)

Loving v. IRS, 917 F.Supp.2d 67

[RWG1950]

I stand corrected.

[TaxGuyBill]

I could be misremembering things, but I have stuck in my head the lobbyists sort-of are the reason that it did not stick.

I seem to remember that much of Congress was supporting regulating tax preparers, and would have likely created a law that DID give the IRS the power to do so (the court overturned things because it ruled that the current law did not give the IRS authorization to regulate things). But then there were too many arguments (such as through the lobbyists) that Congress never took action on it.


As a side note, the original plan to regulate tax preparers is what caused me to become an Enrolled Agent. I figured that if I had to go through the testing and required annual CPE, I might has well do a bit more and become an Enrolled Agent.

[Rapid Robert]

Lobbyists
First a question - for those who think lobbyists had something to do with blocking legislation in this area, could you please provide any information - any information at all - about who might be paying these lobbyists? I don't think it was AICPA or NAEA. Whose deep pockets for the last 20 years are behind blocking the half dozen or more bills that have variously been considered in Congressional committees, or even in a few cases made it through at least one chamber? (For some history of all the failed legislation, see numerous articles by Kelly Phillips Erb, former contributor to Forbes magazine:
https://www.forbes.com/search/?q=tax...h=56215f37279f )

Interestingly, in this thread Beersheba thinks it is lobbyists who are pushing for regulation, while others seem to think the opposite.

Political sentiment
Second, rather than lobbyists, you must consider the choices made by many of your fellow voting citizens, who like Beersheba don't want more regulation. Sen. Ted Cruz, when he was running for president in 2016, specifically mentioned the Loving decision as A Good Thing in one of the nationally televised debates. Do you imagine that he and others of his ilk, and partisan judges like Kavanaugh, are going to support such legislation or let it stand under challenge? The Senate in particular, which is constitutionally designed to over-represent the minority, has on top of that hurdle the additional arbitrary hurdle of the filibuster (yeah, where is that in the Constitution?), so when in the foreseeable future are you going to get 60 or more senators to agree on this?

Circ. 230 obsolesence
Lastly, Circ. 230 has become a joke, it has not been updated in well over 8 years since the Loving decision and two other cases which have made it clear that preparing a return is not practice before the IRS, and the IRS cannot revoke your PTIN for violating Circ. 230. When a document like Circ. 230 starts having significant portions that are obsolete and have not been updated in a many years, who is going to take it seriously?