You don’t have to have a certification to be a tax preparer. All you need to do is hang your shingle, convince people to hire you, and start collecting payments. There are tens of millions of uncertified tax preparers, and those people don’t always know what they’re doing.
The Government Accountability Office released a report this month showing that these uncertified “experts” have made significant errors, “putting their clients at risk of serious enforcement action with incorrect returns.” The large majority of the uncertified preparers who were studied incorrectly calculated refund amounts, claimed ineligible children for the Earned Income Tax Credit, failed to report cash tips, and did not ask the required eligibility questions for a tax credit that helps students cover educational costs in exchange for community service.
The IRS previously tried to regulate preparers with testing and education requirements, but a federal court ruled that the agency didn’t have the authority to do so. And the U.S. Court of Appeals for the District of Columbia upheld that ruling this February.
The GAO is recommending that Congress create legislation that will allow the IRS to regulate tax preparers. President Obama supports this idea, and his 2015 budget proposal would allow the Treasury Department and IRS to regulate all paid tax preparers.