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Included in the discussion of the Affordable Care Act, a.k.a. “Obamacare,” was a preview of the complex calculations for the penalty that an individual or family without health insurance coverage must pay as part of their tax liability beginning with the 2014 tax return.
As I listened to the seminar leader explain this new mess being forced upon us, it occurred to me that one of the problems with the tax preparation industry is that we do not have a national organized “voice” to properly speak for the tax preparer with Congress or the Internal Revenue Service.
As Congress continues to incorrectly use the U.S. Tax Code to administer and distribute the benefits of social welfare and other government programs, and the IRS, in response, forces more and more excessive “due diligence,” regulations, and requirements upon us, the job of the paid tax preparer becomes more and more complicated and involved. And we must just grin and bear it.
While the IRS, if not the Congress, does, from time to time, consult with its “stakeholders” on tax preparation issues, this is merely a “professional courtesy” and, I expect, does not carry much weight in the final decision-making process. The various tax preparer membership organizations do make sincere attempts to represent the paid preparer in Washington, but the different organizations may have differing agendas, and no one organization has sufficient membership to provide the proper “weight” to any kind of serious and effective lobbying efforts.
At last count there were 690,000 PTIN-holders, but the largest of the tax return preparer professional organizations, the above-referenced NATP, has only about 25,000 members.
A good example of the need for a national tax preparation industry lobbying organization is the new excessive “due diligence” requirements for claiming an Earned Income Tax Credit. Tax preparers must now also become social workers and determine whether an individual qualifies for federal welfare benefits. We have enough to do just to get a client to provide us with all the financial information necessary to properly prepare their 1040. We should not be forced to take on this added time-consuming responsibility.
While I no longer accept new clients, if I did, my personal response to the additional due diligence would be to not accept any new 1040 clients who will claim the EITC. But even if 1,000 more tax preparers joined me in this action, it wouldn’t accomplish anything other than to reduce the tax-season agita for those of us who made the decision.
If there was a central national lobbying organization representing all paid preparers -- a PTIN Society -- this organization could have perhaps gone to the IRS and said that if the new due diligence requirements are put into place its 600,000+ members will refuse to prepare tax returns that include an EITC, or just simply say that its membership strongly opposes the new requirement. The organization could have then worked with the IRS to negotiate regulations that would be acceptable to both the government and the preparer.
And this organization could campaign against the continued $63 PTIN renewal fee, which is no longer necessary due to the death of the RTRP mandatory regulation regime.
Our national “voice” could also lobby members of Congress to pass serious tax reform legislation to simplify the 1040 by, among other moves, removing the EITC and other government benefit programs from the Tax Code. Or, if Congress were considering giving the IRS the authority to regulate all “unenrolled” preparers, it could lobby for a “grandfathering” exception for experienced tax pros to any initial competency examination.
This organization would not be competition for existing membership organizations like the NATP, the National Society of Accountants, the National Association of Enrolled Agents, the National Society of Tax Professionals, etc. It wouldn’t offer CPE classes or research services or publish informative journals and newsletters. Its sole purpose would be to lobby Congress and the IRS to reduce the burden, and agita, of tax preparers.
Tax preparers need a unified “voice” in Washington, with real teeth, to speak for us. We should no longer be forced to just grin and bear it whenever the IRS or Congress attempts to make our lives more complicated.
Robert D. Flach has been a tax preparer since 1972, and blogs as The Wandering Tax Pro, as well as writing on taxes for MainStreet.com.