The National Taxpayer Advocate, Nina E. Olson, recently issued the list of priorities for the Taxpayer Advocate Service. The TAS is the independent internal watchdog of the IRS, and Olson’s annual priorities address the agency’s shortcomings. For example, in our last post, we were talking about victims of tax preparer fraud and the IRS’ failure to issue replacement refunds to them. The IRS has that authority — the agency just hasn’t done anything with it.
Tax return preparers are the source of a number of IRS headaches, it seems. Olson’s report also explains the evolution of minimum standards for preparers. The effort began in 2002 with a simple TAS recommendation to Congress: Authorize the agency to establish minimum standards. Congress failed to act — for the next eight years. By 2010, the IRS had reached its limit with legislative delays and took up the task of credentialing under its own standards without Congress’ blessing.
The courts ruled that the IRS had overstepped its authority. The agency cannot make rules if Congress does not specifically say it can. So, the IRS went back to the drawing board and hit on another idea: Rather than making the credentialing process mandatory, the agency would make it voluntary.
The goals of the program are still accountability and competence. Preparers would register after taking a qualifying exam, and they would have to complete continuing education courses to keep their knowledge and skills current. For its part, the IRS would take on the taxpayer education component, communicating with taxpayers and guiding them to credentialed preparers.
These standards, of course, will only apply to “lay” preparers. CPAs, attorneys and Enrolled Agents qualify with their professional credentials.
The report includes a number of other recommendations that we will not go into. Remember, though, the IRS is not bound to adopt any one of these items. The agency did say it had adopted or is working on adopting 69 of last year’s list of 113 recommendations. We know from experience, though, that the IRS can do only so much until the money and the agency’s authority run out.
Source: Internal Revenue Service, “National Taxpayer Advocate Identifies Priority Areas and Challenges in Mid-Year Report to Congress,” July 16, 2014