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Regulation and Compliance > Federal Regulation > IRS

Senators Make Push to Regulate Tax Preparers

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Senate Finance Committee Ranking Member, Ron Wyden, D-Ore., and Sen. Ben Cardin, D-Md., introduced legislation late Thursday to give the Department of Treasury and the Internal Revenue Service “explicit authority” to regulate paid tax return preparers.

The bill, The Taxpayer Protection Act of 2015, requires preparers to demonstrate competency in preparing tax returns, claims for refunds and related documents.

“It’s bad enough that taxpayers have to navigate their way through an overly complex tax code, but worse that many also unknowingly rely on fraudulent or incompetent tax preparers to help with their returns,” Wyden said in a statement. “This bill helps protect hard working taxpayers by ensuring that tax preparers are held to clear and enforceable standards.”

The nation’s “tax code is complicated,” added Cardin. “To protect taxpayers from incompetent or unscrupulous preparers, the IRS needs adequate tools to ensure that preparers are qualified and held accountable.”

Wyden and Cardin said their legislation is in response to Loving v. IRS, a federal appeals court decision which they argue “significantly weakened taxpayer protections.” In its decision, the federal appeals court affirmed a District Court ruling that the IRS’s statutory authority under Section 330 “cannot be stretched so broadly as to encompass authority to regulate tax-return preparers.”

Originally passed by Congress and signed by President Chester A. Arthur in 1884, Section 330 of Title 31 authorizes the Secretary of the Treasury – and by extension, the IRS, a subordinate agency within the Treasury Department – to “regulate the practice of representatives of persons before the Department of the Treasury.”