Senator Robert Portman (R-Ohio) has introduced the Protecting Taxpayers Act, which would give the IRS greater latitude in the regulation of tax preparers, as well as representation before the IRS and I for one welcome it.
My problem with unlicensed tax preparers is that they severely undercut my fees and the public doesn’t know the difference. Not to mention, they create messes that I have to clean up.
The difference in fees between myself and them (unlicensed preparers) is a ton more, to be sure. The reasoning behind that is I have been doing this for almost 25 years, I know what I’m doing and I would never cause a client any jeopardy.
Take this case, for example: There is a really nice mechanic that helps my family a lot and is a very honest guy. He and my wife got to talking and as it turns out his accountant, unlicensed I might add, never gave the mechanic financial statements, amended every corporate return he gave them and then to top it off, the mechanic has an S Corporation.
For some reason the accountant reported half of the mechanic’s income on Form 1120S and a Schedule C at the same time. There was no rhyme or reason for this, then to add insult to injury, the mechanic owes $12,000 from 2005 and the accountant decided to toll the Statute of Limitations by doing an installment agreement.
After examining the tax returns the mechanic qualified for the Currently Not Collectible Status (CNC), which he would have ran out the clock. The accountant even mentioned an Offer in Compromise (OIC), which would have just made the situation worse.
How the unlicensed accountant could represent the mechanic through the process is unknown. This is just one example of why the IRS should regulate tax preparers. Not to mention, these unscrupulous, unlicensed accountants should never, under any circumstances, represent a client before the Service.
The Taxpayer Advocate Service released a report noting that regulation of tax preparers should be regulated. Finally, it seems the Senate has listened and has introduced a bill that would do just that.
Anyone can obtain a Preparer Tax Identification Number (PTIN), or even a Central Authorization File (CAF) Number, all of which mean exactly nothing without a license to represent a client. The IRS has introduced a program whereby an unlicensed tax preparer can represent a client on a tax return they have prepared. However, they can’t go to appeals or handle collections cases.
In the case of the mechanic, I have a mess to clean up and because he does work for my family at cost, I can’t charge my normal fee. Then I have a situation where these people are good people and I feel bad for them.
The point is that is time for regulation of tax preparers. All I can do is report this unscrupulous accountant to the Office of Professional Responsibility, which I am planning on doing.
About Craig W. Smalley, EA
Craig W. Smalley, MST, EA, has been in practice since 1994. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as representation before the IRS regarding negotiations, audits, and appeals. In his many years of practice, he has been exposed to a variety of businesses and has an excellent knowledge of most industries. He is the CEO and co-founder of CWSEAPA PLLC and Tax Crisis Center LLC; both business have locations in Florida, Delaware, and Nevada. Craig is the current Google small business accounting advisor for the Google Small Business Community. He is a contributor to AccountingWEB and Accounting Today, and has had 12 books published on various topics in taxation. His articles have also been featured in the Chicago Tribune, New York Times, Yahoo Finance, Nasdaq, and several other newspapers, periodicals, and magazines. He has been interviewed and been a featured guest on many radio shows and podcasts. Finally, he is the co-host of Tax Avoidance is Legal, which is a nationally broadcast weekly Internet radio show.