Domestic Taxes

Congress slow to help IRS tackle problem of incompetent tax preparers

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Top Republicans are showing no interest in agreeing to the IRS’s request to give the agency more power to regulate tax preparers.

John Koskinen, the IRS commissioner, told lawmakers last week that Congress needed to act to help taxpayers, after a federal court threw out the agency’s plan to license and educate preparers.

But that idea’s a tough sell to the GOP lawmakers who have the IRS in their sights after last year’s Tea Party controversy, even though some have sounded open to tougher rules against unscrupulous preparers.

{mosads}“We have not talked about any legislation at this point,” Rep. Charles Boustany (R-La.), a senior member of the House Ways and Means Committee, told The Hill. “It’s one of those things sort of in the back of my mind. But I don’t know where the committee stands on it right now.

Just days ago, Republicans on the Ways and Means panel intensified their investigation into the improper scrutiny the IRS gave to groups seeking tax-exempt status, accusing former agency official Lois Lerner of targeting the prominent GOP group Crossroads GPS and asking the Justice Department to consider criminal charges.

GOP leaders in both chambers are also pushing hard for the IRS to delay new proposed rules governing the 501(c)(4) groups at the center of the controversy.

Republicans say those rules, which would apply to groups across the political spectrum, would nonetheless codify the targeting of conservative groups. GOP senators at the Finance Committee hearing featuring Koskinen hammered the IRS commissioner over those rules.

On top of that, House Ways and Means Chairman Dave Camp (R-Mich.), who is retiring at the end of the year, is seeking to lay the groundwork for tax reform by trying to extend or get rid of a slew of temporary provisions.

That leaves little time for other potential tax legislation, especially when that measure wouldn’t exactly mesh with the Republicans’ political message this midterm election year.

“It’s a conversation we just need to have, and we haven’t had it,” said Boustany, who added that he broadly supported the IRS’s regulation efforts but doubted any legislation could get enacted this year.

Koskinen urged the Senate Finance Committee to pass a proposal, contained in President Obama’s latest budget, to make explicitly clear that the Treasury Department can regulate all paid tax preparers.

Federal courts have rejected the IRS’s claim that it could move ahead with its tax preparer initiative because of a 19th century statute, dealing with soldiers who lost their horses during the Civil War, allowing Treasury to regulate agents who come before it.

The IRS preparer program, launched in 2010, would force certain preparers to take 15 hours of continuing education classes a year.

At the Finance hearing, Koskinen stressed that most tax preparers are perfectly credible, but added the education requirements “may put us on a path to ensuring that all tax return preparers provide the appropriate level of service to taxpayers.”

The IRS is also looking into offering voluntary continuing education classes, but Koskinen said legislation was by far the preferred route.

“We believe that this level of service will translate into improved overall tax compliance and certainly with that more effective tax administration,” he said.

Finance Chairman Ron Wyden (D-Ore.) shied away from endorsing specific proposals at the hearing, but made it clear that he thinks someone needs to act to protect taxpayers.

A Government Accountability Office released a study last week that found that 17 of the 19 tax preparers GAO personnel went to undercover incorrectly filled out a return.

“As long as the code is so overgrown and so complicated that most Americans have to seek out help to file, they shouldn’t have to worry about crooked or incompetent preparers,” Wyden said. “It is that simple.”

But Sen. Orrin Hatch (Utah), the top Republican on the Finance panel, said crafting effective regulations could be harder than it looks, and suggested the IRS needed to do more to get Congress to act.

“Sen. Wyden wants to see if we can come up with some reasonable way of solving this, and I’m certainly willing to try,” Hatch said.

Tags Charles Boustany Orrin Hatch Ron Wyden
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