Tom and I have reviewed hundreds, if not thousands, of tax returns throughout our respective careers.  We have seen some that are properly and accurately prepared.  We have seen others that are complete disasters.  What is interesting is that no license is required to become a paid tax return preparer.  Tax return preparers do not have to be licensed by the federal government or any state agency in order to prepare tax returns for a fee.

This may change soon.  The IRS is working on rules that will require tax return preparers to be licensed.  This licensing requirement is being brought about by the IRS in an attempt to reduce fraud and improve compliance.  A proposal is said to be forthcoming before the end of the year.  Most analysts feel that this change will be for the good and will mostly impact the small mom-and-pop tax return preparers, and that the national firms and CPAs won’t feel much impact at all.

Personally, I think this is a great move.  Of all the returns that I have reviewed, by far the worst ones are by the lesser-trained, unlicensed tax return preparers.  Tax returns prepared by CPAs or enrolled agents tend to be more accurate and better reflect the tax laws.  This is not to say that all CPAs and EAs are great and that all unlicensed tax return preparers are terrible.  But, based on my experience over the last 16 or so years, the numbers speak for themselves.

Check back towards the end of the year for an update on the status of these new rules.  Maybe they will be in place by the next filing season.