Post by ShivaTD on Sept 26, 2013 8:26:26 GMT
Currently working it's way through the US federal courts is a challenge to IRS attempts to regulate tax preparers based upon the 1884 "Dead Horse" law.
This is, in my opinion, over-reach by the government but it does bring into light a possible IRS regulation because a problem does exist. In most cases the tax preparer is not representing the individual in an IRS audit because the audit never takes place but it could. Many of these tax preparers, such as H&R Block, state that they will defend the tax payer before the IRS based upon the tax return that they prepared.
My issue would be that if a tax preparation service does offer to defend the tax payer before the IRS then it must do so with a Certified Public Accountant or a Tax Lawyer. I would have no problem with an IRS regulation that made the Tax Preparation Service post whether they will represent the person or not and if so then they must do so with a CPA or Tax Attorney. For those "ma and pa" tax preparation services that don't want to do this then they should be required to boldly and explicitly inform the taxpayer of this fact.
Anyone with a little knowledge can prepare a tax return but it take professionals to defend the person before the IRS.
I could also accept regulation where if the tax form is improperly filled out causing the person to owe more in taxes that the tax preparation service should be held financially accountable for the mistakes they make. This would not indemnify an individual that provides false or fraudulent information to the tax preparer.
To ensure the above protections all tax preparations services could also be mandated to be bonded to protect the taxpayer from default in it's obligations by the tax preparation service.
The industry does require regulation to protect the taxpayer but the Obama Administration and IRS are going way too far in their regulation.
WASHINGTON (Reuters) - The Obama administration on Tuesday defended its effort to regulate the tax return preparation business for the first time in U.S. history, basing its case largely on a 19th century law dealing with horses lost or killed in the Civil War.
At an appellate court hearing on a challenge brought by libertarian lawyers challenging the administration, Justice Department Tax Division lawyer Gilbert Rothenberg said: "I hate to beat a dead horse, especially one from the Civil War era."
But he explained that the administration sees the "Horse Act of 1884" as providing ample authority for the U.S. Internal Revenue Service to regulate the tens of thousands of preparers who fill out millions of Americans' federal tax returns.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit heard the administration's argument. Rothenberg said the IRS should be allowed to force tax return preparers -- who are now unregulated -- to pass a competency test and take annual continuing education classes.
But the Institute for Justice, a libertarian advocacy law firm, disagreed.
"Congress never gave the IRS authority to regulate tax preparers," said Dan Alban, an attorney for the institute.
The case has broad implications for the industry, which includes H&R Block Inc, a few mid-tier companies and thousands of tiny, mom-and-pop firms.
finance.yahoo.com/news/irs-rides-1884-dead-horse-law-defense-tax-211608311--sector.html
At an appellate court hearing on a challenge brought by libertarian lawyers challenging the administration, Justice Department Tax Division lawyer Gilbert Rothenberg said: "I hate to beat a dead horse, especially one from the Civil War era."
But he explained that the administration sees the "Horse Act of 1884" as providing ample authority for the U.S. Internal Revenue Service to regulate the tens of thousands of preparers who fill out millions of Americans' federal tax returns.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit heard the administration's argument. Rothenberg said the IRS should be allowed to force tax return preparers -- who are now unregulated -- to pass a competency test and take annual continuing education classes.
But the Institute for Justice, a libertarian advocacy law firm, disagreed.
"Congress never gave the IRS authority to regulate tax preparers," said Dan Alban, an attorney for the institute.
The case has broad implications for the industry, which includes H&R Block Inc, a few mid-tier companies and thousands of tiny, mom-and-pop firms.
finance.yahoo.com/news/irs-rides-1884-dead-horse-law-defense-tax-211608311--sector.html
This is, in my opinion, over-reach by the government but it does bring into light a possible IRS regulation because a problem does exist. In most cases the tax preparer is not representing the individual in an IRS audit because the audit never takes place but it could. Many of these tax preparers, such as H&R Block, state that they will defend the tax payer before the IRS based upon the tax return that they prepared.
My issue would be that if a tax preparation service does offer to defend the tax payer before the IRS then it must do so with a Certified Public Accountant or a Tax Lawyer. I would have no problem with an IRS regulation that made the Tax Preparation Service post whether they will represent the person or not and if so then they must do so with a CPA or Tax Attorney. For those "ma and pa" tax preparation services that don't want to do this then they should be required to boldly and explicitly inform the taxpayer of this fact.
Anyone with a little knowledge can prepare a tax return but it take professionals to defend the person before the IRS.
I could also accept regulation where if the tax form is improperly filled out causing the person to owe more in taxes that the tax preparation service should be held financially accountable for the mistakes they make. This would not indemnify an individual that provides false or fraudulent information to the tax preparer.
To ensure the above protections all tax preparations services could also be mandated to be bonded to protect the taxpayer from default in it's obligations by the tax preparation service.
The industry does require regulation to protect the taxpayer but the Obama Administration and IRS are going way too far in their regulation.