The Internal Revenue Service recently announced that it intends to develop a testing program for tax preparers. While CPAs and enrolled agents (non-attorneys who may represent clients before the IRS) have had testing and licensure programs for a number of years, the estimated 900,000 to 1.2 million individuals who prepare tax returns for a fee can do so without any sort of credential. The logic behind this new IRS initiative is to protect the public from incompetent or unscrupulous practitioners. Apparently, this move is supported by some of the large tax preparations firms who view this as a way to force ill-prepared practitioners out of the field.

There are some who argue that licensure programs should not exist because they represent a restraint of trade and that the market should be the sole determinant of who can offer professional services. Indeed, there may be situations where the development of a licensure program may be a bit misguided. (For example, there is a battle in Virginia over the licensure of yoga schools.) That being said, tax preparation very much seems a situation where some form of regulation seems reasonable to protect the public. Similarly, until the recent mortgage crisis, many states did not have a licensure program for mortgage brokers. To that end, pan was pleased to assist the Indiana Secretary of State in implementing a testing program for loan brokerage professionals.

Reid Klion