Legislative / Regulatory | Taxation

Should tax preparers be licensed? IRS considering it

Microscope Everyone who's sick of seeing unlicensed, unqualified tax preparers belittle the CPA profession every spring, raise your hands.

Yeah, me too.

Now, put your hands down and listen up, because some interesting news is surfacing at the Internal Revenue Service.

IRS Commissioner Doug Shulman says the agency is working on a series of recommendations that are meant to increase taxpayer compliance and improve the work of tax preparers.

Those recommendations may include a call for all paid tax preparers to be licensed in the hopes of "reducing mistakes and combatting fraud," according to the Associated Press.

Shulman hopes to put forth the recommendations by the end of 2009.

Of course, a similar requirement is already on the books in Maryland. Passed during the 2008 session of Maryland's General Assembly, the regulation requires that "all persons offering individual tax preparation services must become licensed by June 1, 2010."

If he's serious about going down this path, Commissioner Shulman would be wise to follow Maryland's lead, for a few reasons:

  • All licensed CPAs and their staffs are exempt from Maryland's licensing requirement.
  • Under Maryland's mandate, the qualifications of tax preparers will be well publicized, as will the fact that the registered tax preparers are not CPAs, tax attorney or enrolled agents.
  • Use of the terms "licensed" and "certified" are limited in Maryland, so as to not confuse the public.
  • At least one seat on the new State Board of Tax Preparers is reserved for a CPA.

The MACPA and its legislative volunteers worked hard to ensure that the state's licensing requirement included these provisions. Without them, the regulation would have muddied the licensure waters, devalued the CPA designation and confused the public. With them, it protects the public, helps prevent fraud and incompetence, and strengthens the CPA profession.

If the IRS intends to license all paid tax preparers, it should include a similar set of exemptions. Doing so will not only protect the taxpaying public. It will also protect a profession that, given our current economic environment, is more important than ever.

Would you support the mandated licensure of all paid tax preparers?


Bill Sheridan