Tax Preparer Bill Stops Fraudsters From Profiteering Off Mammoth Tax Code

Rep. Diane Black Congressman, Tennessee 6th District
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With this year’s tax deadline behind us, many families are dealing with the fallout from unwelcome surprises. Some owed a bill when they thought they would receive a refund. Some learned the credit they depended on in years past is inapplicable to them today. And, invariably, some will learn that their most personal information has fallen into the wrong hands due to the complete lack of safeguards regarding who can charge for tax preparing services.

More than 80 million Americans rely on a professional tax preparer to complete their annual tax returns – and who can blame them? After all, the average taxpayer spends 13 hours filing their taxes.

As a member of the Ways and Means Committee, I’ve spent the last five years working to overhaul the tax code, wrench control back from the IRS, and let families keep more of what they earn. But until conservatives get a willing partner in the White House who will join us in that effort, we must act to protect taxpayers from unlicensed, unaccountable tax preparers who would do them harm.

Today, you can charge money for tax preparing services without a background check or a single professional credential. From the ex-con who did time for identity theft, to the college student who sets up shop in a dorm room, this gaping loophole has allowed an under the table business of fly-by-night tax preparers to flourish, and my constituents have witnessed the adverse effects firsthand.

We have seen tax preparers make up charitable contributions, create false dependents, and even file bogus returns for illegal immigrants – and that’s just in middle Tennessee over the last year.

The evidence isn’t just anecdotal. The Federal Trade Commission says identity theft rose 50 percent from 2014 to 2015 and believes that tax return fraud is the single greatest driver behind the spike. It doesn’t have to be this way.

Last year, I introduced the Tax Return Preparer Competency Act to stop scam artist tax preparers from deceiving my constituents and profiteering off our mammoth tax code. My bill would set basic standards in place – background checks, a written examination, and continuing education requirements – for paid tax preparers so that Americans could know their tax bill is handled with integrity. After all, if we require a credential for the people who cut your hair, maybe it’s worth trying for the person who is accessing your Social Security number.

Beyond giving taxpayers peace of mind, my legislation can also curb government misspending on fraudulent credits. Consider that a Treasury Inspector General for Tax Administration report found that the IRS may have issued more than $15 billion in improper EITC payments in 2013 alone. The National Taxpayer Advocate estimated that more than 76 percent of preparers who prepared returns claiming the EITC did not have a professional credential.  By setting standards for who can prepare those returns, we can start to bring that number down.

Some have said my legislation gives more power to the IRS, but they miss the mark. This isn’t about empowering a government bureaucracy, it is about empowering taxpayers with the knowledge that their most sensitive information won’t fall into the wrong hands and that their final tax return reflects what they truly owe.

Importantly, the legislation puts Congress in the driver’s seat, ensuring that our Republican majority – not the IRS – will determine what accountability metrics are used and how we oversee our unregulated tax preparers.

I didn’t introduce the Tax Return Preparer Competency Act because I thought it would be politically expedient– it’s not. I did it because the bill offers a workable answer to a real problem that has touched too many of my constituents and because tax season is enough of a headache on its own. The last thing Americans need is the threat of bad actors in this industry making it even worse.