Quantcast
Get breaking news alerts via email

Click here to manage your alerts
The Washington Post: Stronger regulations needed for tax preparers

The Washington Post

The Washington Post

First Published Apr 10 2014 01:01 am • Last Updated Apr 10 2014 10:40 am

The earned-income tax credit is one of the government’s most effective poverty-fighting, work-encouraging tools. The program pays low-income employees a wage supplement, in the form of a tax credit, that can be worth more than $6,000 a year to a family with three or more children.

The EITC has offset higher Social Security taxes and the minimum wage’s erosion by inflation in recent years.

Join the Discussion
Post a Comment

The tax credit’s Achilles’ heel, however, is implementation. As the program has expanded, it has become more complex; the eligibility criteria related to proving custody over children are notoriously difficult to parse and all too easy to manipulate. When you combine that with EITC beneficiaries’ lack of time, resources and expertise, you get between $11.6 billion and $13.6 billion in inaccurate payments in 2012, according to the Treasury Department’s inspector general.

Most of that was overpayment, though there is evidence that the program’s complexity also deters some eligible workers from applying.

Many who qualify turn to paid tax preparers for help, only to find that their troubles have just begun. Most preparers are honest and try their best; the market is unregulated, however, so poorly qualified or fraudulent freelancers abound. Typically, fly-by-night preparers charge a contingency fee, giving them an incentive to inflate the EITC — for which the client is ultimately answerable to the Internal Revenue Service, as testimony Tuesday before the Senate Finance Committee revealed.

Both Congress and the IRS have been aware of the issue for years; in 2011, the IRS introduced regulations that would have required preparers to register and meet minimum qualifications, but federal courts struck down that well-intentioned rule. The most recent ruling came in February from the U.S. Court of Appeals for the D.C. Circuit, which upheld a finding that the regulations lacked sufficient basis in law.

That prompted Finance Committee Chairman Ron Wyden, D-Ore., to hold Tuesday’s hearing in preparation for introducing a measure to authorize stronger regulations. President Obama supports the concept.

Foes of preparer certification suggest that free-market competition will weed out bad actors. But this ignores the fact that taxpayers are ultimately responsible for preparers’ errors or omissions — and that choosing a different preparer next year is a poor remedy for the money an incompetent or dishonest one might have cost you this year.

Surely if Republicans and Democrats can agree on anything, it would be ensuring that the EITC pays exactly what the law requires — no more and no less.




Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.