WASHINGTON – U.S. Senator Ben Cardin (D-Md.) and Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) today introduced legislation to allow the IRS to require minimum standards for paid tax preparers.
Around 60 percent of taxpayers use paid preparers and the IRS receives more than 10,000 complaints per year about bad actors. While the Justice Department and IRS are able to prosecute preparers for fraud, the D.C. Circuit’s 2014 decision in Loving v. IRS weakened taxpayer protections by barring prosecution for incompetence.
The Taxpayer Protection and Preparer Proficiency Act requires that preparers demonstrate competency in preparing returns, claims for refund and associated documents. It also requires preparers to complete continuing education requirements.
The IRS would be given the authority to rescind taxpayer identification numbers (PTINs) of preparers found to be incompetent or fraudulent.
“Our tax code is complicated and many families rely on outside help to figure it out. To protect taxpayers from incompetent or unscrupulous preparers, the IRS needs to ensure that preparers are qualified and held accountable,” said Senator Cardin. “I’m pleased to join in support of this legislation, which restores meaningful and much-needed standards and oversight in the paid preparer industry.”
“Incompetent or unscrupulous preparers regularly exploit taxpayers to pad their bottom line,” Senator Wyden said. “States like Oregon have led by requiring minimum standards for paid preparers at the state level, and it’s critical that we restore federal standards to protect all taxpayers.”
The GAO in 2014 unveiled results of an undercover investigation into paid tax preparers, finding that at 17 of 19 randomly selected sites, preparers failed to complete a return accurately due to serious mistakes or willful negligence.