Registration of Tax Preparers

Beginning this Fall, a new registration and testing scheme is being implemented by IRS under the guise of ensuring that the public is protected and that all preparers are minimally competent. I call it a guise, since it won't have anything to do with that, of course. The reason? For those who already have some letters after their names, no testing will be required. So attorneys (most of whom have little no knowledge of taxes), CPA's practicing in large corporations or conducting audits of large corporations (most of whom have little to no knowledge of taxes), will be exempt. They'll be required to register and pay the fee/tax, but are not required to pass a competency test.

The original aim of this was indeed to ensure some level of minimal competency, (AND raise money!) and the target was clearly, though never ever spoken, the large chains and franchise stores who hire seasonal preparers with no experience and who return to some other life as soon as it's April 15, not to be seen again. When the AICPA and the Bar Association successfully lobbied to exclude their members, regardless of their tax knowledge, the competency aim missed the target. Many of the strangest questions that we get on the tax professionals' forum come from CPA's or attorneys who end up having to do a return or counsel someone. But they would be allowed to prepare returns without testing.

The truly sad thing is the unintended consequence of this shortsightedness. Much as new gun laws don't make gangsters turn in their guns, this registration and testing is really more about politicians being able to say they did something. Worse, they're hurting people who are already hurting. Who uses the chains and franchise stores that specialize in cheap returns and refunds today? The poor. The poor are the very ones who will suffer under this new scheme, since the chain stores may have to increase prices to cover the registration and testing fees, and the continuing education requirements for seasonal employees. Or, be more selective about those employees, cutting their staffs. Either way, it'll be a little harder and/or more expensive to get services by the people who already don't have many options. Most can't even go get TurboTax and do their own returns unless they have a computer. So they're stuck.

It makes me sad, and a bit angry.