Buyer Beware...Again

Not that long ago anyone with a pencil, calculator and the interest could prepare taxes for a fee.  Then the IRS stepped in and said that in the interest of consumer protection all individuals preparing taxes for a fee must become Registered Tax Return Preparers (RTRP) at a minimum.  To become a RTRP one needed to pass an exam on individual tax returns and complete a minimal amount of Continuing Education.  Enrolled Agents (EA), Certified Public Accountants and Tax Attorneys were exempt from this requirement as their credentialing requirements were more stringent than the RTRP requirements.

In a recent decision, the US District Court of Washington stated that the IRS does NOT have the authority to regulate tax preparers.  So, unless Congress gives the IRS this authority the RTRP will be one of the shortest-lived credentials in history.

So, what does it mean to you and me.

Well, first off as an EA I am biased.  Certainly, anyone paying for tax preparation services expects that their tax preparer is competent.  Credentialing is one way to do that.  On the other hand, credentials can serve as only a barrier to market entry (which is what the plaintiffs argued) resulting in less choice and higher prices.  I tend to lean towards letting the free market decide.

But, for you it means you need to be more diligent in who you select to prepare your taxes.  There are still some credentials (EA, CPA, Tax Attorney) that apply in this area.  But the bottom line is that we're back to where we were...Anyone with a computer (I imagine most won't use pencil and a calculator) and the desire can prepare taxes for a fee.

Just like the title of the article...Buyer Beware.

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Comment   |  6 years, 8 months ago from Alexandria, VA