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Sunday, April 24, 2005

Coming Soon To A Congressional Committee Near You

Ever heard of a "refund loan facilitator?

What about an "enrolled agent?"

Well, folks, those are -- guess what -- new jobs defined in a new piece of legislation before the US Senate. It's called S. 832, "The Taxpayer Protection and Assistance Act of 2005, a bill to amend the Internal Revenue Code of 1986 to provide taxpayer protection and assistance, and for other purposes."

Now that doesn't sound so bad, does it? Except the average taxpayer is going to look at "for other purposes" with an "uh oh" reaction. And that reaction is an appropriate one.

On first impression you might think "Oh, the government is going to protect the US taxpayer? From the IRS? After all, they do have the right of search and seizure if they think you've paid them too little or not at all. Or maybe they're going to protect the taxpayer from prosecution for making mistakes because of an incomprehensible tax code?

No such luck.

S. 832, a bill that in itself is evidence that Senators and their aides have no idea of what their constituents need and want, expands the tax service by requiring education, testing and licensing of tax preparers. It calls for the establishment of "clinics" for tax preparation for the poor.

That's not so bad, you say? After all, tax preparers need to know an awful lot, especially because in many cases if they make a serious mistake, we go to jail. That's true, they do need careful traning, but the current code is so unwieldy and contradictory, and it's changed so often (like in this bill, for example) that no one can actually learn it.

Of course it adds another layer of bureaucracy (and cost) to the IRS, creating the office of "Director, Office of Professional Responsibility." And nevermind that it adds a few hundred more pages to a tax code that is already 60,000 pages long. The IRS already costs the taxpayer billions of dollars a year -- this bill just adds to the burden.

The bill also establishes clinics where tax preparers make out income taxes for people who shouldn't have to pay taxes in the first place -- the working poor. It requires all tax preparers to take training in the complicated tax code and to continue that training. The tax preparer who doesn't work pro bono for the poor (at the cost of the US government) will, of course, pass those training fees along to the taxpayer.

A "refund loan facilitator" is the person who sends the prepared tax form to the IRS via e-mail. Presumably the working poor don't have computers.

Specifically, the bill contains provisions for return preparation clinics for low-income taxpayers, clarification of enrolled agent credentials, regulation of income tax return preparers, regulation of refund anticipation loan facilitators, and taxpayer access to financial institutions. The provisions regulating income tax return preparers state that currently unlicensed preparers will have to take an initial competency exam. Thereafter, they will be able to maintain their eligibility through continuing education. There are penalty provisions for failure to comply with these regulations. The proposal also directs a public awareness campaign to inform the public of the requirements that any compensated preparer of tax returns must follow.

Bill Clark, a self-described tax preparer and avid FairTax supporter, says, "One of the things that has bothered me about it, it does not seem to apply to IRS personnel who answer tax questions over the phone. As a tax preparer, I would have to be "licensed" to give advice whereas the IRS phone critters (temps in some cases) would not. And we all know how accurate their advice is."

"Also," he adds,"while increasing the operating cost of the IRS, it would encourage tax preparers to increase their fees for being 'IRS certified' (even though this isn't really a certification). Thus increasing the overall cost of compliance. (Yeah I ain't no dummy, my fees would go up!)"

So this bill is wrong on many fronts. It solves no problems; it creates some. Most important, though, the bill increases the burden of the income tax system on society. Poor people should be exempt from paying taxes to give them a chance to work and save until they reach a decent income level. How does that work? Families save for educations so they can get better jobs. The current tax structure very effectively holds them down.

We don't need S.832, we need S 25 (the FairTax bill), which kills the income tax and gives a rebate to the poor so that they pay no taxes at all.

Please inform yourself about the FairTax. There's an immense amount of information at and a If you'd like to talk about it and ask questions, sign up at the FairTax national roundtable at and ask your questions.

This is important. With your help we can get rid of the income tax and fund the US government, social security, medicare, veteran's benefits, etc. with the FairTax.

The President has called for reform: Help us do it.


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