According to this Forbes article published on 1/19/2013, the IRS actually lost it’s case brought on by three independent tax preparers Sabina Loving of Chicago, Illinois, John Gambino of Hoboken, N.J., and Elmer Kilian of Eagle, Wisconsin. The article titled “IRS Stopped ‘Dead In Its Tracks’ In Efforts To Regulate Tax Preparers” explains how the IRS established a plan to regulate tax preparers and to protect taxpayers from potentially fraudulent preparers. This plan imposed the following requirements on tax preparers nation-wide:
- Must register with federal IRS (prior to this we only registered with our state)
- Take a 4-part competency exam that cost $116 (not to mention the money spent on test preparation courses)
- Take at least 15 continuing education credits (California already requires 20 hours/year, costing $200+ per year)
- Be issued PTINs (Preparer Tax Identification Numbers) which must be included on paid returns and listed in a public database of tax preparers ($65.00 per year)
What’s the problem with all of this? Attorneys, CPAs and enrolled agents (EAs) are exempt from the requirements, and only the little guys -like myself – the independent tax preparers, have to comply. This point alone is senseless. I’ve personally fixed mistakes made by a CPA and and several enrolled agents. It’s not that I think they’re incompetent; but rather they decide to help their clients tell those little white lies on their tax returns. Attorney’s CPAs and EAs are just as likely, in not more likely, to fudge it. And since this is the issue the IRS wants to combat, why not include them in the new regulations?
Added to that, according to the lead attorney on the case, Dan Alban of the Institute for Justice, he won a a simple claim: Congress never gave the IRS the authority to license tax preparers, and the IRS can’t give itself that power.
I guess I gave them the power to stick it to me because even though I thought it was an unfair regulation, I never thought to fight it. In reality, other than having to pay additional annual fees, the regulations themselves are not overarching.
We’ll see where this goes next.