By Markeshia Ricks
April 20, 2009
A bill to regulate the state’s tax preparer industry might have gotten a boost with the prosecution of five tax preparers and the indictment of a sixth on tax‐related fraud charges last week.
But even that might not be enough to dynamite the logjam in the House that could keep the bill from reaching the floor for full debate.
The Middle District Court of Alabama recently announced the prosecution of four Montgomery residents and a Millbrook woman, and the indictment of a fifth man from Montgomery for tax-related fraud, according to U.S. Attorney Leura G. Canary’s office.
One Montgomery man was convicted of 26 separate counts of aiding and assisting in the preparation of false federal income tax returns while operating a tax preparation business. According to Canary’s office, Tommy Jordan, 55, and his co-conspirators prepared hundreds of fraudulent tax returns, which generated more than $3 million in fraudulent refunds.
Stephen Black, president of ImpactAlabama, said the tax preparer regulation bill, which is based on similar legislation inOregon, might not have stopped people likeJordanfrom breaking the law.
“What the bill does is help change the culture of the industry in the state,” he said. “If we put these provisions in place in the state, it improves the culture of responsibility.”
Black said theU.S.attorney’s office doesn’t investigate or prosecute every complaint of fraud, but a state board that is designated to do that could if it were given the proper authority. Under the bill, individual tax preparers would have to obtain a license, pass an examination and be subject to an oversight board that would have the authority to investigate complaints and even shut an individual preparer’s doors if a preparer is found to be operating in a fraudulent manner.
J.C. Snowden, president of the National Independent Tax Preparer Association, said it was good that the U.S. Attorney’s Office was able to stop tax preparers who were operating fraudulently. He said he hopes they continue to do that kind of work, because fraudulent operators give the entire industry a bad name.
“We want to put those kind of people out of business,” he said.
Snowden said legitimate tax preparers support regulation, but not regulation that locks tax preparers out of the process of creating the rules that would govern their industry.
“The intent of the bill is great, but the language of the bill is discriminatory against the industry that it proposes to regulate,” he said.
Snowden said that the bill needs more time so that the state doesn’t waste time and money implementing it.
His organization opposes the bill for several reasons including the proposed make up of the oversight board and the board’s authority to stop a tax preparer from operating. The association also objects to the appointment of board members who might be exempt from the regulations that the bill would put in place.
“The board members shouldn’t be exempt from the rules and regulations they’ll be writing and administering,” according to the association’s Web site. “This act shouldn’t limit as many current business owners who’ve been legally operating under the guidelines and sanctions of the IRS.”
Impact Alabama and the National Independent Tax Preparers Association are the two strongest groups for and against the bill–though there are others that have joined the mix including a few legislators. But the continued fighting over the merits of the bill among those outside the legislative process have little to do with the problems the bill might be facing now.
The House has been virtually shut down because of the Legislative Black Caucus’ continued fight to bring back a bill that would remove the state portion of the sales tax on food, and the Republican House Caucus’ continued fight to get more of their bills on the House calendar. The Republican Caucus also is refusing to let any bills backed by Senate Democrats come up for debate because of a Senate Democrats continued filibuster of House Republican bills.
Speaker of the House Seth Hammett said he believes the tax preparer regulation bill is a good idea and he would like to see the House have an opportunity to debate it. But to his knowledge it is not on an upcoming calendar for the House to consider.
“There are some members who are for it and there are some against it,” he said of the bill. “I think it’s a good idea, but it’s a Senate bill with a Democratic sponsor.”
Hammett said the bill is in better shape than most to still be debated and passed if that is the desire of the body.
The bill was passed unanimously by the Senate in February.
