Unlicensed Tax Preparer Regulation

The issue

Minnesota currently has statutes in place regulating the accounting practice of licensed professionals. The federal government has a structure in place regulating those who practice before the IRS. There is currently no regulation for the practice of unlicensed preparers. The IRS has released a plan to create a new federal regulatory structure for this group . The new regulations will take effect Jan. 1, 2011.

In recent years, there have been several reports related to unlicensed preparers preying on vulnerable people and willfully preparing fraudulent returns.

This topic has generated some discussion at the legislature in the past few years. It is expected to be part of the 2010 legislative discussions, but will likely not be acted upon until after the IRS regulations are implemented. With an IRS plan in place the focus is expected to change, but the issue of what preparers are doing in Minnesota will remain.

Why you should care

Fraudulent preparers give all accounting professionals a bad name. Even though the targeted group for this legislation is the unlicensed preparer, everyone is portrayed in the same group when something bad happens. No one wants the image of the profession tarnished by a few bad actions. We all can support sanctions and penalties for those who are doing sub-standard, unprofessional or illegal work. However, we also want to ensure there is no illusion that those who would be newly regulated hold the same credentials as a CPA.

MNCPA solutions

• Increase resources for the Department of Revenue to investigate, sanction and publish a list of fraudulent preparers.
  
• Increase public awareness through Department of Revenue publications and Web sites.
  
• Work with Minnesota’s congressional delegation to address the issue nationally.
  
• Adopt the enrolled agent standard as the standard required to prepare taxes for compensation in Minnesota. This is a more stringent requirement than the IRS plan, but one the MNCPA feels is warranted.

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