The Constitutionality of the Inevitable Regulations of All Tax Return Preparers

Journal of Accounting, Ethics & Public Policy 14(3) 735-766 (2013)

32 Pages Posted: 26 Sep 2013  

Ariel Alvarez

Montclair State University

Date Written: September 24, 2013

Abstract

Complying with the labyrinthine federal tax code is a complicated business. Each year millions of Americans must present to the Internal Revenue Service (IRS) a sincere and accurate statement of their income, applicable deductions and exemptions, and the total tax owed or refund claimed. Failure to do so potentially results in stringent and expensive penalties. Thus, it is reasonable to expect that the professionals or other individuals who assist these millions of Americans in preparing their tax returns be knowledgeable, careful and honest. However, studies show that many tax return preparers are operating outside an acceptable standard of professional responsibility. Although the IRS maintains strict regulation of certain kinds of tax preparers via the famous “Circular 230,” until recently a large industry of unregistered tax preparers has operated largely unrestricted. This paper examines the contextual evolution of the IRS’s regulation of unregistered tax preparers, including its historical exercise of judicial and statutory remedies, the extension in 2011 of Circular 230’s application to all tax return preparers and the objections to regulation raised by some unregistered tax preparers and their supporters. In light of the strong arguments in favor of regulation, this paper concludes that the IRS’s ultimate regulation of all tax return preparers is basically inevitable.

Keywords: Tax Law, Tax Policy, IRS, Constitutionality of IRS Regulations, Tax Preparers

JEL Classification: H2, H24, J2, J23, J3, J44, K2, K34, L84, M4

Suggested Citation

Alvarez, Ariel, The Constitutionality of the Inevitable Regulations of All Tax Return Preparers (September 24, 2013). Journal of Accounting, Ethics & Public Policy 14(3) 735-766 (2013). Available at SSRN: https://ssrn.com/abstract=2330522

Ariel Alvarez (Contact Author)

Montclair State University ( email )

Upper Montclair, NJ 07043
United States

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