House Bill 14-1285, Taxpayer Protection Act Disclosures, which would require paid tax preparers in Colorado to disclose their qualifications and experience, passed second reading in the House on the morning of Friday, March 14.
Despite the fact that millions of Americans rely on paid tax preparers to help them file accurate tax returns, the IRS estimates that only about half of those preparers are regulated, like CPAs, attorneys and "enrolled agents," or tax specialists. For the other half, there are currently no requirements that professional preparers meet minimum standards of education, training and competency.
Of course not all paid preparers are bad actors, but a recent report by the National Consumer Law Center (NCLC) found high levels of incompetency and outright fraud, including intentional omission of income and falsifying information to make the taxpayer eligible for various credits and deductions.
When fraud does occur, it especially impacts low-income, elderly and non-English speaking individuals.
We believe that by requiring paid preparers to show credentials and disclose rates before transactions occur, we can help reduce fraud, ensure the professional standards of tax preparers and help consumers receive accurate tax returns that comply with all appropriate laws.
Our policy analyst, George Awuor, testified in favor of the bill before the House Business, Labor, Economic and Workforce Development Committee on March 11. Read his full testimony here.