Alban emphasized that his group is not challenging the Preparer Tax Identification Number, or PTIN, registration requirements, which enable the IRS to track all the returns prepared by a particular tax preparer. “If someone is consistently doing something that the IRS thinks is potentially in violation of the law, they can much more easily catch that sort of behavior and notice patterns in the returns that are filed, and do something about it in enforcing the existing laws,” said Alban. “The idea basically is if there are a few bad apples, you shouldn’t crack down on everyone. Instead use the tools you already have to figure out who those bad apples are and go after them and not impose substantial costs on people who are completely above board and doing a good job, but are forced to bear costs that in some cases are so substantial that they are being forced out of business altogether.”
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Chuck McCabe, president and CEO of Peoples Income Tax in Richmond, Va., supports many of the IRS’s aims, but he also sees good reason for the lawsuit. “The IRS is pretty far along in the regulations, and it’s already been implemented,” he said. “I’m in favor of the regulations. I think they’re necessary in our industry because there are a lot of incompetent preparers out there who don’t have the qualifications to do tax returns. They should be licensed to cut someone’s hair, but not to do their taxes. I’m not opposed to regulation itself, but what I would be opposed to is the IRS using the regulations as a source of revenue by charging fees beyond what their costs are.”
He believes the cost of administering the PTIN would probably be recovered after the first year, but with each annual renewal it will become a continuing revenue stream for the IRS. “It’s kind of like a toll for the road,” said McCabe. “They usually implement the tolls to build a new road or fix it, but once the road is built the toll never seems to go down. I would be concerned that the fees the IRS charges for the different elements of the regulation not exceed their costs because it wouldn’t be fair to independent tax business owners to become a source of revenue for the IRS.”
McCabe also believes the requirements imposed on the registered tax return preparers in the expanded Circular 230 requirements are excessive relative to their responsibility. “I’m concerned that the IRS is relegating their oversight of taxpayers to tax practitioners because they don’t get enough money from Congress to do their job,” he said. “But I don’t think it would be a good idea to kill the profession of tax preparers.”