NAEA Applauds Effort to Safeguard Taxpayers

Washington, DC (April 27, 2007) Senator Jeff Bingaman (D-NM) introduced S. 1219, the Taxpayer Protection and Assistance Act of 2007, on the Senate floor Wednesday night. The bill would require the Treasury Department to set standards for commercial tax return preparers and make it obligatory for unenrolled professional preparers to pass a competency exam and take continuing education classes. The National Association of Enrolled Agents (NAEA), which worked diligently to pass a similar taxpayer protection bill last year, applauds this important step toward safeguarding the American public from unethical or incompetent tax preparers.

“When you assume your barber is licensed, you are probably right, but when you assume your tax preparer is licensed, you’re probably wrong. Given that the ramifications of a bad haircut pale in comparison to the ramifications of a poorly or fraudulently prepared return, shouldn’t preparers be required to earn a license?” asks NAEA Immediate Past President Frank Degen, EA.

In addition, NAEA believes that this legislation would help to close the much-discussed “tax gap,” a means used by the IRS to gauge taxpayers’ compliance with their federal tax obligations. As tax professionals licensed to represent taxpayers in trouble before the IRS, enrolled agents are repeatedly faced with fallout from the work of incompetent or corrupt paid preparers. A Government Accountability Office (GOA) study found several instances of incompetent preparation by chain preparers, often resulting in large refund overclaims. This kind of illegal action ultimately harms the honest preparer, the taxpayer, the tax administration system and the US Treasury.

Senator Bingaman, who introduced the bill with Senators Smith, Akaka, Durbin, Kerry and Lieberman, stated that “As long as we continue to require taxpayers to determine their own tax liability, Congress has a responsibility to ensure that we do not leave taxpayers vulnerable to abuses from those masquerading as tax professionals. The current environment is bad for everyone, including the majority of tax return preparers who provide professional and much needed services to taxpayers in their communities.”

The new bill is similar to S. 832, which Senator Bingaman introduced in the last session of Congress. Last summer, the Senate Finance Committee approved S. 832, but the full Senate never considered the bill. NAEA has long advocated for regulation of tax preparers that includes a competency-based entry exam and continuing education requirements, and has been meeting with key House and Senate staff in anticipation of congressional action this year.

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