Sacramento, CA (PressExposure) December 17, 2009 -- Internal Revenue Service Commissioner Douglas Shulman plans to recommend to the President and Treasury Secretary by the end of this year that income tax preparers need to be regulated by the federal government.
âBeauticians in most states have to be licensed, yet the majority of tax preparers nationwide, who handle one of the most important documents for consumers each year do not have to be educated or insured,â said Celeste Heritage, administrator for the California Tax Education Council (CTEC), which oversees a state requirement to register unlicensed tax preparers.
The IRS has been holding meetings with industry leaders, including CTEC and its enforcement partner, the Franchise Tax Board, for insight on establishing a federal standard. California, New York and Oregon are the only states that have set requirements for paid tax preparers; however, Maryland is also working to implement legislation it passed in 2008.
In California, anyone who prepares income tax returns for a fee and is not a licensed attorney, certified public accountant (CPA) or IRS enrolled agent (EA) is required by law to register with CTEC. Each CTEC-registered tax preparer (CRTP) has to complete an educational requirement on tax laws and obtain a surety bond to protect clients against fraud.
According to the IRS, federal oversight of tax preparers is necessary in order to reduce fraud, improve compliance and close the tax gap. It is a proposal that does not seem to have much opposition other than how to fund it; however, CTEC believes there is a solution.
âCTEC is a good model because it has tax professionals regulate their own industry at no cost to the state,â said Alan Shattuck, CPA and CTEC board member.
Before CTEC was established in 1997, the California Department of Consumer Affairs managed the registration of tax preparers. To help save money without jeopardizing the protection of taxpayers, the state decided to privatize the program. Today CTEC is a nonprofit quasi-public benefit corporation that is run by a board of directors representing tax professionals, three staff members and is funded by CRTPs who pay an annual $25 registration fee.
âWe have an extremely useful program that can be used nationally,â said Heritage. âThe IRS should seriously look at CTEC and consider privatization.â
Last year CTEC registered more than 44,000 tax preparers. CPAs and CRTPs are the two largest tax preparer groups in California. Please visit http://www.ctec.org or call (877) 850-2832.