IRS plans to seek more regulation of tax preparers

WASHINGTON -- The IRS is working on new rules that could require paid tax preparers to be licensed to improve tax compliance and reduce fraud, IRS Commissioner Doug Shulman said Thursday.

Eighty percent of taxpayers get help with their returns, either from paid preparers or computer programs, Shulman told a congressional subcommittee. Tax preparers currently don't have to be licensed, unless they represent clients in proceedings before the Internal Revenue Service.

Shulman said he wants "better leverage" to make sure tax preparers act ethically.

"Paying taxes is one of the largest financial transactions individual Americans have each year, and we need to make sure that professionals who serve them are ethical and ensure the right amount of tax is paid," Shulman said.

Shulman said he will seek input from the industry before making his proposals to President Obama by the end of the year. The proposals could include new regulations or laws.

Potential recommendations include beefing up enforcement against return preparer misconduct.

The preparer community is diverse and includes those that do operate under some federal guidelines — such as enrolled agents, certified public accountants and lawyers — and another group that may follow no guidelines — which includes some software vendors — the agency said.