| WASHINGTON, April 8
WASHINGTON, April 8 The U.S. Internal Revenue
Service asked Congress on Tuesday for legal authority to
regulate thousands of unlicensed tax return preparers, but
lawmakers were neutral on the idea.
"I will have to talk with my colleagues to see what's
doable," said Senate Finance Committee Chairman Ron Wyden, a
Democrat, after gaveling an end to a hearing on the issue.
He gave no indication of when legislation might be
introduced along the lines sought by the IRS, which failed last
year in an effort to begin policing tax return preparers on its
own, without explicit statutory authority from Congress.
IRS Commissioner John Koskinen told lawmakers at the hearing
that many Americans are hurt by incompetent and dishonest tax
preparers. The tax preparation business is not regulated at the
federal level, though some states have started policing it.
Up to 60 percent of tax return preparers are unlicensed,
Koskinen said, and the IRS wants to require those individuals to
pass a competency test and take continuing education classes.
"I urge Congress to quickly approve ... explicit statutory
authority to regulate all paid tax return preparers," he said.
The hearing was Congress' first look at the tax preparation
industry since a U.S. appeals court in February struck down the
IRS' first attempt to regulate tax preparers.
The U.S. Court of Appeals for the District of Columbia said
the IRS did not have the authority on its own to impose rules on
up to 700,000 preparers who are not already licensed as
attorneys, accountants or "enrolled agents."
Wyden called the court's decision a "baffling outcome."
Tax return preparers often make more mistakes on tax filings
than people who file their own taxes, according to a report
released on Tuesday by the Government Accountability Office, the
investigative branch of Congress.
Undercover GAO agents who visited commercial tax return
preparers found inaccurate returns put taxpayers at risk of IRS
enforcement actions, the report said.
"If Congress agrees that significant preparer errors exist,
it should consider legislation granting IRS the authority to
regulate paid tax preparers," the GAO report said.
About a third of the $9.4 billion tax return business is
controlled by H&R Block Inc and three other large
companies. The remaining two-thirds is divided among licensed
and unlicensed preparers, many of them mom-and-pop operations.
Finance committee Republicans largely used the hearing to
grill Koskinen about other issues, including the IRS' proposed
rules for tax-exempt "social welfare" groups and its role in
implementing the Affordable Care Act of 2010.
(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh
and Dan Grebler)