Washington (April 2, 2004) -- Senate leaders this week urged the Treasury and the Internal Revenue Service to step up efforts to pursue "unscrupulous" tax practitioners.

Sen. Chuck Grassley, chairman of the Committee on Finance, and Sen. Max Baucus, ranking member, say the IRS is doing too little to rein in tax practitioners, and must increase its efforts to stop abusive tax shelters, bad service from paid preparers, and other problems.

"At the heart of every abusive tax shelter is a tax lawyer or accountant," Grassley said. "If the IRS isn't getting at the lawyers and accountants who take unfair advantage, then it's not pulling out the weed by its roots. The same goes for paid tax preparers who overcharge their clients. Often the tax practitioner, not the taxpayer, is the problem."

In a letter to Treasury Secretary John Snow, Grassley and Baucus charged that the IRS chief counsel has been "slow to follow through on any substantial changes to Circular 230. The IRS has historically restrained itself from regulating paid tax preparers even though there is no statutory restriction," they said. "We remain concerned that the Treasury and the IRS have not acted to alter that approach."

While the senators applauded the selection of Cono Manorato as head of the Office of Professional Responsibility, they expressed concerned that the Treasury and the IRS have "unnecessarily narrowed the effectiveness" of the office. The senators requested that the IRS provide the Finance Committee with its plans for pursuing "unscrupulous" practitioners and "for OPR to fully and effectively pursue those who are enabling others to abuse the tax laws."

In their letter, Baucus and Grassley urged "an end to the self-limiting mindset that has plagued the Treasury and the IRS regarding OPR, adding, "Mr. Namorato's success hinges on your willingness to give him more authority."

-- WebCPA staff

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