Coleman Jackson, P.C. | Law Watch Transcript
Welcome to Law Watch
My name is Reyna and I am the legal assistant here at Coleman Jackson PC a tax, litigation, and immigration law firm based in Dallas Texas.
Our topic today is “Regulation of Paid Tax Preparers Likely Coming Soon”.
This presentation is word for word of a question-and-answer session that I had with Attorney Jackson. I will only be relaying the information that Attorney Jackson and I discussed.
So, Attorney, let’s get to it. What is all this buzz that we’ve been hearing in the news about the regulation of paid tax preparers?
Attorney Coleman Jackson
About two or three weeks ago a proposed bipartisan legislation was introduced in the U.S. House of Representatives, proposing to authorize the U.S. Treasury to regulate paid tax return preparers and enforce minimum standards of competency to protect the American tax payer and protect the integrity of the federal tax system. Earlier this year, President Biden had introduced The American Family Plan that also has regulatory protections for American tax payers which also seeks to regulate paid tax return preparers. Both of these measures have strong support by the American Institute of Certified Public Accountants and other professional organizations who have long supported measures to improve the competency and accountability of tax return preparer industry.
Novice taxpayers go to these tax return preparers to competently advise them in complying with the tax laws and help them file their tax returns on time. So that leads me to my second question.
Question No. 2:
How exactly does this proposed legislation expect to protect American taxpayers?
Attorney Coleman Jackson
Let us keep in mind that this is merely proposed legislation at this point. It must go through the legislative process in both the House of Representatives and U.S. Senate and ultimately be signed into law by the President. That may or may not happen and the terms of the bills announced in the House a few weeks ago and the legislation proposed by the President might change before it ever becomes law.
But let me just discuss some of the highlights of the proposed legislation to date:
The Proposed legislation will impose the following regulatory scheme with respect to paid tax preparers:
The IRS will have regulatory authority to regulate paid tax return preparers;
The IRS will have the authority to reinstitute the IRS’s 2011 Registered Tax Return Preparer Program. This is the program that was challenged in Loving v IRS whereby the courts stated that the IRS did not possess the authority to impose certain mandatory requirements on paid tax return preparers.
The IRs will have the authority under the proposed legislation to sanction and revoke an incompetent or fraudulent tax preparer’s tax identification number; thereby, prohibiting the tax preparer from representing taxpayers before the IRS or filing tax returns for the public.
The proposed legislation has other provisions, but these three are the major ones. The bottom line is Congress and the President are trying to establish minimum competency requirements for tax return preparers. The public has a right to expect competency and professionalism in those who they trust with their tax information and in those they rely on to help them comply with complicated tax laws. Those who prepare tax returns should possess the knowledge and skill to accurately prepare tax returns and help taxpayers to take lawful tax positions. These public policy goals seem to be the expression of the pending legislation.
What if any laws protect taxpayers now from incompetent tax return preparers or those preparers that simply commit all kinds of unspeakable acts harming their clients?
Attorney Coleman Jackson
Well, there are various laws and regulatory bodies that regulate certain tax return preparers. For example, lawyers are regulated by state licensing authorities. Likewise, Certified Public Accounts (CPAs) are also regulated by state licensing authorities. Enrolled agents are currently regulated by the IRS.
But currently there are unregulated tax return preparers who prepare tax returns as well. This is the big problem because these unregulated tax return preparers are not subject to any accountability authority. If a taxpayer has a problem with their lawyer, they can go to the State Bar and file a complaint. If a taxpayer has a problem with their CPA, they can go to the State authorities who licenses CPAs in their State.
The problem is how do you regulate and protect the public from incompetency. There are long established tax laws against malfeasance and fraud committed by tax return preparers. Congress has also over the years passed due diligence requirements of tax return preparers. And the IRS has had the power to impose various penalties on tax return preparers who unlawfully disclose or use taxpayer information and who advise taxpayers to take unlawful deductions and other unfounded tax positions and commits tax fraud.
Finally, most States have professional mal-practice laws and consumer protection laws that might give some taxpayers a legal remedy in tax preparer cases. But those laws can be complex and have extremely short statutes of limitation. What the attorney is saying is this: it is costly to sue in Texas and most other states and most taxpayers probably don’t know where to start in holding a tax return preparer accountable. Whenever anyone sues a tax preparer in court, it’s wise to hire a lawyer. Lawyers are expensive; lawsuits take time and the wheels of justice turns slow.
All the while, the wronged taxpayer may have to pay the IRS back taxes, penalties and interest for problems caused by an incompetent or unethical tax preparer. The attorney believes that this is at the core of the proposed regulation of paid tax return preparers. The trusting public needs a remedy that is quick and effective in getting unscrupulous and incompetent tax preparers out of the market place.
Question No. 4
How likely is this legislation to become law that is designed to protect taxpayers from their own tax return preparer?
Attorney Coleman Jackson
Answer No. 4:
I don’t know. All I can say is that several different pieces of legislation are in process.
And some powerful regulatory organizations like the American Institute of Certified Public Accountants and the National Tax Return Preparers have publicly come out in favor of some if not all of the measures that we’ve been discussing in this video.
We have to wait and see whether some of these protections will actually become law. The legislative process can be slow, but Attorney Jackson believes that these changes are needed based on some of things that he has seen over the years in representing taxpayers, many of whom were harmed by their tax return preparers through no fault of their own. They were innocent victims. It’s a shame and hopefully some if not all of these regulatory measures will become law.
Question No. 5
Our listeners just have to continue to listen to our Legal Thoughts Podcast, watch our Law Watch videos and read our blogs because our law firm communicates regularly on topics in taxation, litigation and immigration that might educate our audience in the areas of law that we practice.
Question NO. 5:
Attorney, am I right about this? You do intend to monitor the progress of the legislation designed to protect American taxpayers from incompetent or unscrupulous tax return preparers? I mean this is an important development because most folks are just at the mercy of their tax return preparer
Definitely. Anyone interested in learning more about this and other topics dealing with taxation, contract litigation and immigration can follow our Legal Thoughts Podcast, Law Watch videos and blogs by going to www.cjacksonlaw.com. All of our publications are free of charge and are designed to educate our clients and the general public on legal topics that we think might be of importance to them.
Attorney Jackson sees the right to practice law as a privilege and publication of these items are our way of giving back to the public and hopefully helping people understand the laws and their legal rights. They do not constitute an Attorney-Client relationship between our firm and the listeners of the podcasts, viewers of our videos or readers of our blogs. People should seek legal representation of their choosing.
We are very likely to monitor the developments on the tax preparer regulatory front and alert our listeners either by follow up podcast like this one or by Law Watch video published on our U-Tube Channel or by blogs. Again, our viewers can access all of these for free by going to www.cjacksonlaw.com.
Reyna Munoz’ Concluding Remarks
I’d like to take the time to thank Attorney Jackson for providing us with this information about proposed legislation designed to protect American taxpayers from incompetent or unscrupulous tax return preparers.
Our listeners who want to see more videos like this one should subscribe to our channel and listen to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast. You can follow our blogs by going to our law firm’s website at www.cjacksonlaw.com.
This is the end of Law Watch for now
Thanks for giving us the opportunity to inform you about the “Regulation of Paid Tax Preparers Likely Coming Soon”.
This has been a presentation based on a question-and-answer session with Attorney Jackson. Find our contact details in our description box. See you in our next video.