Friday, January 16, 2009
By BRIAN LYMAN
Capital Bureau
MONTGOMERY— Tax preparers would be required to have state licenses under a bill being drawn up for the legislative session beginning in February.
The bill, sponsored by state Rep. Tammy Irons, D-Florence, and state Sen. Quinton Ross, D-Montgomery, would establish a board to regulate commercial tax preparation and require annual registration by those charging money to complete tax forms.
The state already licenses certified public accountants and lawyers; the bill focuses on seasonal tax preparers, who are not regulated.
“To do hair inAlabamayou have to get a license,” said Stephen Black, director of Impact Alabama, an organization which places University of Alabama students in social service projects, including voluntary tax assistance. “(To do) the most important document families sign all year? Nothing.”
Supporters of the bill say the industry often hurts low-income families by not claiming refunds due to them through the federal Earned Income Tax Credit, or EITC. Low-income families may also be vulnerable to predatory lending practices targeted at rebates.
Impact Alabama estimates that 75 percent of families that qualified for the EITC in 2005 went to a commercial tax preparer, costing them about $78 million, with an average fee of $250 per return.
“There are individuals who do a good job on tax preparation, but sometimes you get in situations where some fly-by-night tax preparers have nothing in mind but leaving taxpayers holding the bag,” Ross said.
Impact Alabama runs a program called SaveFirst, which trains students to provide free tax preparation for low-income families. Black said that the group hopes to work with more than 4,000 families this year.
“It sort of occurred to me that 4,000 families was a great effort, but there are 491,000 families in Alabama,” he said. Four thousand families “is less than 1 percent,” he added.
The bill had not been filed as of Tuesday, but a draft version was making the rounds. It would also charge annual fees to tax preparers with the proceeds supporting volunteer tax preparation programs.
Jeannine Birmingham, president and chief executive officer of the Alabama Society of Certified Public Accountants, said Tuesday her group was reviewing a draft of the bill.
“It is a very common occurrence that we hear about what we refer to as seasonal tax preparers and fraudulent work they do,” she said. “These people are not certified public accountants.”
Attempts to reach H & R Block and Jackson Hewitt, which hire seasonal tax preparers, were unsuccessful Tuesday.
Currently, three states —California, Oregon and Maryland— require tax preparers to be licensed. InOregon, tax preparers must complete 80 hours of classes, pass a test and pay an $80 annual licensing fee.
A federal Government Accountability Office report released in August found thatOregon’s 2001 tax returns were about $250 more accurate per filing than the national average, though the GAO could not determine if this was due mainly to the licensing requirements.
