Taxpayers’ tax liabilities can be minimized by using an experienced and competent tax professional for their tax preparation and tax planning needs. Unfortunately, the process for finding a competent tax professional is more difficult than it should be.
Many taxpayers are unaware that Enrolled Agents are tax professionals who have passed a very difficult IRS exam that demonstrates their competence in understanding the U.S. tax law. While many attorneys and CPAs offer tax services, it is important that the taxpayer perform due diligence on finding a competent and experienced attorney or CPA. You want to avoid those attorneys and CPAs who have no tax background or experience and solely depend upon their tax preparation software to prepare complete and accurate tax returns.
Making matters worse, is how the IRS has handled its responsibilities to identify bad tax preparers and protect the public from using these predator firms. The IRS’s efforts to protect the public from unscrupulous tax preparers have been one gigantic dismal failure. When the IRS posted its rules to regulate the industry, a tax preparation firm asserted that the IRS lacked the authority to do so. When the case was tried, the courts ruled that Congress never gave the IRS the authority to regulate the tax preparation industry.
Did Congress immediately give the IRS the authority to regulate the tax preparation industry to protect the public? No! Accordingly, the IRS has begun a program whereby it will post on its website a list of tax preparers (who are not Enrolled Agents, CPAs or attorneys who must meet IRS and professional standards) who have voluntarily taken 18 hours of continuing education, including a six-hour federal tax law refresher course, that will allow these persons to differentiate themselves in the market place. While on the surface this may sound good, there is one major problem. There is no standardized test that these non-credentialed preparers need to pass. Thus the IRS, by posting the names of persons who have taken the education credits and passed some type of test given by who knows who, is misleading the public that these persons are qualified tax preparers.
If you don’t think this is a problem, consider this. In Opinion No. 26472 of the Supreme Court of the State of South Carolina, an attorney was disbarred. A law firm then engaged the disbarred attorney as a tax preparer. The IRS Office of Professional Responsibility, the division at the IRS responsible for monitoring tax preparers, upon learning of his employment by the law firm, demanded that he and the law firm stop filing electronic tax returns prepared by this attorney and that the employer provide to the IRS certain documents. Rather than complying with the IRS demands, the disbarred attorney and his law firm filed a complaint against the IRS stating that it did not have such authority. The U.S. District Court in Nevada (Sexton v. Hawkins, D. Nev. 2014 BL 307343, No. 2:13-cv-00893) granted an injunction on Oct. 30, 2014 against the IRS stating that it had not been determined that the IRS has authority over the disbarred attorney and the law firm employing him, and that the attorney and his law firm are not required to produce documents for or respond to inquiries by the IRS. The court noted that the defendants had pleaded sufficient facts to raise the question as to whether the attorney was merely acting as a tax preparer and was not acting in a representative capacity. Taking this court finding to its naturally conclusion, that disbarred attorney can now take the voluntary continuing education program and then be shown on the IRS website as a tax preparer recognized by the IRS. What a travesty that is being played upon taxpayers by the IRS and Congress.
If you want to learn more about your personal tax situation and how competent tax professionals can benefit you, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.