Licensing tax preparers would benefit everyone

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By The Staff

Indiana just avoided a state government shutdown after longer than usual budget negotiations prompted by the state's now taking in less tax revenue than in recent years.

And our federal government is running up record budget deficits to try to get the economy going again.

But one idea recently suggested by Internal Revenue Service Commissioner Doug Shulman could help federal and state governments collect more tax revenues regardless of the state of the economy.

Shulman proposed requiring education and training as well as licensing for everyone who gets paid to prepare tax returns. He said he plans to submit his proposals to President Barack Obama and Treasury Secretary Timothy Geithner by the end of the year.

As Washington Post financial columnist Michelle Singletary wrote in her syndicated column June 15, "Right now, anybody and their mama can set up shop and prepare tax returns."

There are attorneys, certified public accountants and enrolled agents who prepare tax returns and are licensed by state or federal authorities. But there are also many commercial tax preparers who are not licensed and have virtually no training.

According to the Associated Press, the IRS investigated more than 600 cases of possible fraud by tax preparers from 2006 to 2008. During that time, 356 tax preparers were convicted.

Much of the fraud is undoubtedly deliberate by unscrupulous preparers. Some may also be the result of unqualified preparers' simply not being familiar enough with all the tax laws. In both cases, requiring training and licensing of preparers should help governments collect the taxes that are owed.

Such measures would also help taxpayers. Although hundreds of tax preparers have been convicted of fraud, it is always the taxpayer who must pay additional taxes, interest and any penalties incurred in such cases. They would not have to worry about such penalties if there were regulations to ensure that their tax preparers were qualified.

So licensing tax preparers is a move that will benefit everyone.

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