Tax Preparer Regulation: My Response to Joe Kristan’s Response to My Response of His Response

Tax Preparer Regulation: My Response to Joe Kristan’s Response to My Response of His Response

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We simply must bring this debate to a conclusion for I can no longer bear the encomiums.

When a miraculously talented blogger like Joe Kristan opens a rebuttal to one of your blog posts by telling the world how “fine” and “excellent” you are, you’d better learn to pucker.

Of course I did call Joe a “highly regarded” blogger, but that was only because it’s true.

Because someone has to start the shutting-up (it rarely happens naturally, especially with bloggers), I hereby declare this post to be my last word on the subject of tax preparer licensing, but even as I do so I know that I am probably lying.

In a prior post I made the argument that we should regulate unlicensed tax preparers to level the playing field between them and already regulated preparers (CPAs, Lawyers and IRS Enrolled Agents).

Joe took exception to this and responded in a blog post titled Level Playing Fields?

The playing fields are bumpy already. While lawyers have to keep up a certain level of CPE and so on, that can be gamed. One of the most popular schools for lawyers in Iowa is the year-end bar association tax school held at the Marriot. It is popular because it provides lots of CLE in December, when the lawyers are running up against their deadline. It is also popular because it is broadcast closed-circuit in the hotel, so the lawyers can get their CLE without ever leaving their rooms. So the lawyers can do client work, or party, or sleep in, and still get their CLE. Most lawyers take their CPE seriously, but it would be astounding if everyone did. If lawyers can game CPE so easily, how hard could it be for a much larger cohort of licensed preparers?

I am offended.

I would never lounge in a hotel room to get my CPE training. I always sit at the back of the classroom with a hot cup of Java and the Sports page.

Joe, of course, is correct when he says that some already regulated lawyers and CPAs don’t take their CPE requirements seriously and merely go through the motions in order to get the credits.

But is this enough to throw the baby out with the dingy bath water?

One could just as easily argue (I am not) that we should beef up the current regulatory scheme to ensure that people stop gaming it rather than ditch it altogether.

If we ditched all of the regulatory schemes that some people “gamed,” we’d have no government at all because all are to some extent gamed.

(That wasn’t an applause line, Joe.)

I think Joe is saying that he opposes regulation and licensing not as a concept, but because he believes it doesn’t work and that government is incapable of making it work.

(If I have mistated Joe’s position here I have no doubt he will correct me forthwith in yet another blog post prefaced by a declaration of my abject wonderfulness.)

The truth is it’s hard to argue with him on this (I’ll find a way) because I am a long-time believer that in most things the mega-bureaucracy is inefficient and wasteful.

But because I oppose big government doesn’t mean I propose no government. There are some things government must do and I think this is one of them.

In the 20 plus years of my practice, both as a CPA and a tax attorney, I have had hundreds of clients hire me to fix problems caused by unlicensed tax preparers. 

Some of these unlicensed preparers intentionally manufactured fake job expenses or fake Schedule “C” expenses. Others even more egregiously concocted entire schemes like the infamous Slavery Reparations Credit.

Again, I am not suggesting a complex regulatory regime but, rather, a simple system (Joe says the ones that start simple end up complex), where the government knows who the tax preparers are and the tax preparers know (or at least suspect) that Big Brother is watching them.

Is that such a big deal?

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida

Comments

  1. Charles C. says:

    Boy Joe, in regards to standards and licensing of tax preparers, you haven’t been on some front lines and trenches of the industry that I have. I’m just guessing, … but if you knew some of what is really going on out there, under your radar level. In buckets and droves. Have you heard about the $300 billion tax gap?

    I just can’t believe what IRS lets go through the cracks, … did I say cracks, well a crack big enough to fly a Boeing 747 in between, if you call an alligator a lizard, well yes, they let things fall between the cracks…. he,he,he,…. . These returns are prepared by unlicensed, unregulated, unknown ‘professionals’, Believe me, you WANT professional standards. The higher the better. But like banking regulation, we will compromise on the tiny band-aid solution and nothing will change. I’m a former auditor, I say former because I just could not take it anymore. I now just practice individually and in small firms. But I would like to see the industry evolve, upwards.

  2. Suzanne says:

    Peter,

    I have a comment & a request.

    Having been married to a MN attorney for over 40 years, CLE hours offered anytime in Dec. were always appealing , especially if it was in a warmer climate.

    Some of the partners, we traveled with, did show up at the end of the session for their proof of attendance certificates. Does part of the responsibility rest with the organization presenting the conference? Certificates should not be so available to obvious non-participants.

    Does a double-standard exist? No one wants their doctor sitting in the last row reading the sports page and texting. Is there a certain perverseness among some attorneys? That being said, here is my question.

    I am retired in AZ. I had a non-licensed tax professional, recommended to me, do my taxes starting in 2007. Recently, I received a letter from the IRS saying, I had omitted $8,000 in income from my 2007 return.

    Now, I have @ $5,000 payment due to the IRS. It does tick me off! I now pay $200 /month while the interest continues to accrue. It’s putting a dent in my emergency fund!

    Do I have any recourse? He admitted it was his error and gave. me $200 to pay part of the interest. If he was licensed would his insurance, help cover the cost? The small claims division in AZ goes up to $2,500. Should I file a claim citing his specific
    service performance?

    Thank you for your consideration is this matter,
    Suzanne

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