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Senate Finance Democrats Call for Paid Preparer Standards

APR. 19, 2016

Senate Finance Democrats Call for Paid Preparer Standards

DATED APR. 19, 2016
DOCUMENT ATTRIBUTES
  • Authors
    Wyden, Sen. Ron
    Schumer, Sen. Charles E.
    Stabenow, Sen. Debbie
    Cantwell, Sen. Maria
    Nelson, Sen. Bill
    Menendez, Sen. Robert
    Carper, Sen. Thomas R.
    Cardin, Sen. Benjamin L.
    Brown, Sen. Sherrod
    Bennet, Sen. Michael F.
    Casey, Sen. Robert P., Jr.
    Warner, Sen. Mark R.
  • Institutional Authors
    Senate
    Finance Committee
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2016-8273
  • Tax Analysts Electronic Citation
    2016 TNT 76-39

 

April 19, 2016

 

 

WASHINGTON -- Senate Finance Committee Ranking Member Ron Wyden, D-Ore., and Finance Democrats today sent a letter to Senate Finance Committee majority members calling for bipartisan action to help protect honest taxpayers from tax fraud -- whether it's by identity theft or unscrupulous tax return preparers.

This letter comes in advance of the Senate Finance Committee markup on Wednesday, April 20, of an original bill to curb identity theft and tax refund fraud as well as a second bipartisan bill aimed to protect taxpayers. Legislation requiring minimum standards for paid tax preparers was previously included in a bipartisan Senate Finance Committee bill, "The Preventing Identity Theft and Tax Refund Fraud Act," the markup of which was postponed in September 2015.

"Congress needs to do a better job of protecting honest taxpayers from fraud," said Wyden. "That includes ensuring that paid tax return preparers are held to minimum standards of competency as they have access to taxpayers' most private information, including banking accounts and Social Security numbers. Having just passed the tax filing deadline, taxpayers should be able to go on with their lives without also having to worry about being scammed."

Wyden, along with Senators Cardin, Carper and Warner, plan to offer an amendment that would provide the Department of Treasury authority to develop and impose minimum standards for paid tax return preparers.

Putting in place minimum standards for paid tax preparers has received support from outside consumer groups, low income advocates, the National Taxpayer Advocate, the Treasury Inspector General for Tax Administration and GAO.

The letter can be found here. The amendment can be found here.

 

* * * * *

 

 

April 19, 2016

 

 

Dear Majority Members of the Senate Finance Committee:

Yesterday marks the deadline for Americans across the country to file their taxes. Most taxpayers have spent the last few months trying to navigate our complex tax system in order to get their returns done correctly and on time. Tax fraud is turning an already painful process into a nightmare for too many lawful taxpayers. According to a previous report from the Treasury Inspector General for Tax Administration (TIGTA), tax refund fraud losses from identity theft are expected to reach $21 billion from 2012 to 2017.

These days most everyone knows someone personally who has been victimized either by tax-based identity theft or a fraudulent tax preparer. Taxpayers are left reeling, spending on average four months and hundreds of dollars dealing with the aftermath of being targeted for identity theft fraud. In the case of being taken advantage of by an incompetent or dishonest return preparer, who, far too often, is not certified or required to meet even minimum standards of competence, innocent taxpayers are required to pay the tax they owe or return their refund, including interest and other penalties. Last year paid tax return preparers submitted over half of all individual income tax returns filed, and of the almost 700,000 paid preparers that have registered with the IRS, approximately 400,000 don't claim to have professional credentials -- and that's just the preparers we actually know about.

We can all agree that our Committee has a clear responsibility to protect honest taxpayers by pursuing legislative policies that improve the security of their tax information and smooth the filing and refund process. Delivering on that responsibility we all came together last fall and agreed on a bipartisan bill, "The Preventing Identity Theft and Tax Refund Fraud Act", designed to curb identity theft and stop unscrupulous tax preparers -- addressing two of the top scams on the annual IRS "Dirty Dozen" list. Since that bill was pulled from Committee mark-up eight months ago, incidents of tax refund fraud have only grown in number and severity hurting Americans across the country and costing taxpayers millions of dollars.

Recent examples of tax-based identity theft and refund fraud include:

  • In Georgia a tax preparer illegally obtained names and social security numbers to submit 557 fraudulent income tax returns to the IRS, costing the government $419,139.

  • An eastern Pennsylvania man who ran Dunmore Cash Checking, a fraudulent cash checking, tax preparation and money transfer business serving a largely Hispanic clientele used 250 stolen identities to claim $1.6 million in tax refund checks according to the Associated Press.

  • A Maryland and DC-based tax preparer filed nearly 200 federal returns that claimed roughly $400,000 in fraudulent returns.

  • Indiana reported that 12% of tax refund dollars requested in 2014 were fraudulent according to the Indianapolis Star. Most recently a tax preparer who owned and operated more than 20 tax preparation stores in Indianapolis directed employees to falsify Form 1040 Schedule C forms, resulting in a $1.5 million loss to the taxpayers.

  • In Iowa the Gazette reported that more than 10,000 fraudulent returns were filed last year and of those 2,333 refund claims used stolen identities from Iowa taxpayers.

  • In Ohio a tax preparer used her clients personal information to file false returns without their knowledge or consent and had refunds diverted into her bank account and bank accounts controlled by others who in turn transferred the money to her.

 

Additional examples can be found here.

As we work together to improve the American tax system, protecting consumers should be at the heart of our effort and is a clear example of bipartisan agreement that we can move forward on now. Protecting consumers isn't a political issue -- it's our job. We look forward to working with you to advance this proposal to crack down on fraud by curbing tax-based identity theft scams and putting in place minimum standards for tax preparers. To that end, we must also codify the Volunteer Income Tax Assistance (VITA) program at the funding levels needed to ensure that trusted, free tax assistance remains available to Americans nationwide. Congress should help taxpayers focus on getting their taxes done without also having to worry about getting scammed, whether it's by ID theft or unscrupulous preparers.

Sincerely,

 

 

Ron Wyden

 

Ranking Member

 

 

Debbie Stabenow

 

United States Senator

 

 

Bill Nelson

 

United States Senator

 

 

Thomas R. Carper

 

United States Senator

 

 

Sherrod Brown

 

United States Senator

 

 

Robert P. Casey, Jr.

 

United States Senator

 

 

Charles E. Schumer

 

United States Senator

 

 

Maria Cantwell

 

United States Senator

 

 

Robert Menendez

 

United States Senator

 

 

Benjamin L. Cardin

 

United States Senator

 

 

Michael F. Bennet

 

United States Senator

 

 

Mark R. Warner

 

United States Senator
DOCUMENT ATTRIBUTES
  • Authors
    Wyden, Sen. Ron
    Schumer, Sen. Charles E.
    Stabenow, Sen. Debbie
    Cantwell, Sen. Maria
    Nelson, Sen. Bill
    Menendez, Sen. Robert
    Carper, Sen. Thomas R.
    Cardin, Sen. Benjamin L.
    Brown, Sen. Sherrod
    Bennet, Sen. Michael F.
    Casey, Sen. Robert P., Jr.
    Warner, Sen. Mark R.
  • Institutional Authors
    Senate
    Finance Committee
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2016-8273
  • Tax Analysts Electronic Citation
    2016 TNT 76-39
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