Tax preparers in Oregon may set a standard for future regulation of tax preparers nationwide, according to a new report from the Government Accountability Office.
The GAO looked at Oregon's and California's regulations and qualification standards for paid tax preparers. The study pointed out that most other states do not have such standards. The GAO analyzed tax year 2001 data from the Internal Revenue Service and found that Oregon returns were more likely to be accurate while California returns were less likely to be accurate, compared to the rest of the country after controlling for other factors likely to affect accuracy.
In dollar terms, the average Oregon return required approximately $250 less of a change in tax liability than the average return in the rest of the country.
California and Oregon have requirements that preparers must meet before preparing returns in those states. California paid preparers who are not attorneys, CPAs, enrolled agents (or employed by one of these types of tax practitioners) must complete an education requirement, obtain a bond, pay a fee, and register. In the following years, they must complete continuing education requirements, and renew their registration.
Oregon has similar, but more stringent requirements. Oregon has a two-tiered licensing system, with an education requirement and examination for licensed tax preparers and work experience and a second examination for licensed tax consultants. Oregon exempts CPAs and their employees, as well as attorneys, from these requirements. Oregon requires enrolled agents to take a shorter version of the consultant examination. Fifty-four percent of Oregon applicants passed the state's basic examination. Recently, Maryland enacted legislation to regulate paid preparers and at least three other states have similar pending legislation.
Two bills before Congress would require national paid preparer regulations, and Congress asked the GAO to see whether Oregon and California could set a model for the rest of the country. Oregon appears to be more of a likely candidate. "If Congress judges that the Oregon paid preparer regulations account for even a modest portion of the higher accuracy of Oregon federal tax returns at a reasonable cost, it should consider adopting a similar regime nationwide," said the GAO.
