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Should tax preparers be licensed? Right now, dog groomers and massage parlors can do taxes, too

Posted Apr 8, 2014 4:40 PM CDT
By Martha Neil

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You have to be licensed to operate a massage parlor in many jurisdictions. But if that same business wants to prepare income tax returns, too, there are no additional requirements to be met, the national taxpayer advocate told a Senate committee on Tuesday.

"It could be that the person at the massage parlor is a very, very qualified return preparer. But I have no idea," said Nina E. Olson at a Senate Finance Committee hearing. "And that's my point: I have no idea. In many states, there are regulations of massages. The massage part of what that person does is subject to testing and hygiene visits. But the preparing of taxes? There's no regulation."

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Image from Shutterstock.

Olson actually spotted a massage parlor offering tax-preparation services when she was in Texas to make a speech a few years ago, reports the Washington Post's Wonkblog (reg. req.). Someone else showed her a photo of a dog groomer also operating as a tax preparation business.

Federal courts have ruled that the Internal Revenue Service doesn't have the power to regulate tax preparers, so those who think such regulation is needed are now turning to lawmakers at both the federal and state level.

"You can’t audit your way out of this problem," Olson said.

Her written testimony (PDF) provides additional details.

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