New IRS Database Will Let Consumers Examine Tax Preparers’ Qualifications

Boston Globe - July 28, 2011

Boston Globe

Taxpayers will be able to examine the qualifications of paid tax-return preparers in a 
database being built by the Internal Revenue Service that may be available as soon as 2013.

The database is part of the phased-in regulation of tax preparers that began in 2010 with a
requirement that they register with the IRS. Over the next two years, paid preparers will be
required to pass a competency test. They will also need to take annual continuing education
courses unless they are in professions, such as accounting and law, with their own
professional standards.

“The goal is to ensure that taxpayers receive top-quality service from this important
industry,’’ David Williams, director of the IRS Return Preparer Office, said in a statement
before a subcommittee of the House Ways and Means Committee.

The database will contain the names, addresses, and qualifications of tax preparers, along
with any publicly disclosed disciplinary actions.

Paid preparers handle about 60 percent of all tax returns filed annually. About 717,000 of
them have registered so far.

Williams said the agency does not know the total number of paid preparers. The IRS has
said it is contacting about 100,000 preparers who worked on returns this year and did not
comply with registration requirements.

The subcommittee’s chairman, Charles Boustany, a Louisiana Republican, said he is
concerned that the IRS isn’t doing enough to publicize its efforts.

Boustany urged the agency to “conduct outreach to ensure that return preparers and
taxpayers alike know and understand the new requirements.’’

He also said there have been “no basic competency requirements for tax-return preparers.
Practically anyone can prepare a federal tax return for any other person for a fee.’’

The government decided to regulate paid preparers after identifying a troubling level of
errors on tax returns they had handled. In 2006, the Government Accountability Office had
tax returns prepared at 19 outlets of tax-preparation chains across the country. “In all 19
cases there were mistakes,’’ said James R. White, the GAO’s director of strategic issues.

“Some favored the taxpayer. Some favored the government.’’Kathy Pickering, vice president
of government relations at H&R Block Inc., proposed that the IRS certify the company’s testing
program because it exceeds IRS requirements.

Williams said he has heard from 15 to 20 businesses seeking such certification and is
concerned that “we would end up with a patchwork system. Our concern was there would
be consumer confusion’’ over which certification was valid.

David Rothstein, a researcher at Policy Matters Ohio, which examines how government
policies affect low- and middle-income people, urged the IRS to require tax preparers to
provide clear estimates of their charges to consumers.

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