Joe Kristan in his many persuasive arguments against IRS enhanced tax preparer regulation has pointed out that tax preparers are already subject to sanctions for unscrupulous or fraudulent tax preparation.
Last week Larry Lokken of the Tax Vox Blog blogged about the three tools currently used by the IRS to sanction bad taxpayers: 1) Preparer identification; 2) preparer penalties; and 3) injunctions and disbarment from IRS practice.
However, Larry does not believe these methods as currently used by the IRS constitute a sufficient deterrent to fraudulent and incompetent tax preparation:
All of these remedies kick in only after the fact. None applies until a return is filed, and the penalties and injunctions only apply after the IRS has identified and investigated a preparer.
Although the IRS does not separately report on the civil preparer penalties, the number of such penalties is probably not large in relation to the total number of preparers. Only a few preparers are hit with the most severe sanctions.
Because of the lack of comprehensive data on the performance of preparers, it is not possible to know how effective the IRS’ efforts against bad preparers have been. The limited available evidence suggests, however, that the penalty and injunction programs are, at best, making a small dent in the problem.
I agree with Larry. Although tax preparer regulation won’t stop all unscrupulous tax preparation, it will certainly discourage some would-be bad actors from entering the field.
How can this be a bad thing?
1 response so far ↓
1 Who is a Professional? // Oct 16, 2009 at 12:22 am
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