Washington (Feb. 10, 2003) -- Although more than 50 percent of Americans pay a tax preparer to complete their income tax returns, most preparers are not required to meet minimum standards of competency, said National Taxpayer Advocate Nina Olson.

In her report to Congress, Olson outlined a proposal to require all persons (other than attorneys, CPAs and enrolled agents) who prepare more than five federal tax returns for a fee to register with the Internal Revenue Service. All such persons would be required to pass an initial examination testing technical knowledge and competency to prepare individual or business tax returns, with annual refresher exams each succeeding year.

"There are between 700,000 and 1.2 million paid preparers," said Ken Drexler, senior advisor for the annual report. "If you subtract the number of attorneys, CPAs and enrolled agents, there are at least 50 percent of paid preparers who are not held to a competency standard."

Olson acknowledged that the proposal might result in some tax preparers dropping out of the system, or going underground and no longer signing their name to a return. However, she noted, a licensing program with enough resources to provide real consequences for tax preparers who contribute to non-compliance "has the potential to achieve significant improvements in taxpayer compliance at a much lower cost than extending audit coverage to the affected population."

-- Electronic Accountant Newswire staff

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