The Faculty Lounge

Raising the Tax Preparer Bar: How the Taxpayer Assistance and Service Act Could Transform Tax Preparer Oversight and Compliance

For better or worse, a large number of taxpayers in the United States rely on others to prepare their tax returns on their behalf.  Both academic research and governmental studies have repeatedly shown that the quality and integrity of tax return preparation services vary widely. Studies by the Government Accountability Office (GAO) and the Treasury Inspector General for Tax Administration (TIGTA) have found that returns prepared by non-credentialed tax preparers are more error-prone. Additionally, fraudulent preparers often appear on the IRS’s “dirty dozen” list of tax scams, encouraging taxpayers to claim improper credits or deductions. Taxpayers who follow bad advice may face financial penalties, interest, and repayment of improperly claimed benefits. Many taxpayers are unaware of these risks.

Under existing regulations, the IRS has oversight over attorneys, certified public accountants (CPAs), and enrolled agents (EAs) under Section 330 of Title 31 of the U.S. Code, enforced through Circular 230. However, following the 2014 Loving v. IRS decision, the IRS lost the ability to regulate non-credentialed tax preparers, leading to widespread concerns about compliance and taxpayer harm.

Given the attention that this issue has gotten from the government and from commentators over the past decade, it is not surprising to see this issue included in the Taxpayer Assistance and Service Act.  Section 504 of the Act takes this issue head on and addresses concerns regarding tax return preparers, particularly non-credentialed preparers who operate without regulatory oversight. If enacted, this provision would grant the IRS the authority to deny, revoke, or suspend a Preparer Tax Identification Number (PTIN) based on competence, ethical violations, or fraudulent practices.

Under Section 504, non-credentialed tax preparers must demonstrate their suitability by: (1) passing a criminal background and tax compliance check; (2) completing up to 18 hours of continuing education (CE) annually, including ethics, professional responsibility, and tax law; and (3) attending and participating in IRS-approved educational programs.  In addition, the Secretary of the Treasury may continue the Annual Filing Season Program (AFSP) or similar programs to allow non-credentialed preparers to obtain limited representation rights before the IRS and to list certification under such a program as a credential.  Attorneys, CPAs, EAs, and tax preparers licensed under state programs with comparable standards are exempt from these new requirements.

These requirements would have teeth and transparency associated with them—Section 504 authorizes the IRS to deny, suspend, or revoke a PTIN as well as impose monetary penalties for: (1) failure to meet CE and suitability requirements; (2) demonstrated incompetence, unethical behavior, or fraudulent practices; or (3) violations of Circular 230.  The IRS must publish disciplinary actions online within 30 days, redacting taxpayer information. The agency must also annually report the most common tax return errors and the primary reasons for preparer penalties. Of course, as is the case involving any IRS enforcement action, the success of these measures will depend on sufficient funding and administrative capacity. If enforcement resources are stretched too thin, fraudulent preparers could continue to operate undetected.

Section 504 would go a long way towards addressing the ability of non-credentialed paid taxpayers to pray on the most vulnerable.  By mandating suitability and competence standards, combined with enhanced transparency and enforcement mechanisms, the Act would have the benefit of being a stronger baseline legislative solution to the voluntary compliance certification system I proposed as a market-based administrative solution that could create incentives for tax preparers to adopt best practices and align their interests with compliance.  But, the Act could potentially go even further to increase even more the incentives for preparer compliance.  This could be done with additional provisions from the voluntary compliance certification system that  I proposed, which would bolster preparers’ ability to compete on the basis of compliance and help potentially steer taxpayers to preparers with a proven track record of accuracy and ethical behavior.  Section 504’s proposed changes implicitly support the idea that preparers who meet education and conduct standards should be distinguished from those who do not and that the use of a preparer that complies with these standards should be recognized as a risk-reducing decision for taxpayers.  Section 504 could be strengthened even further to recognize these truths even more explicitly with stronger incentives to encourage taxpayers to select the most compliant preparers.  While it might make sense not to include these incentives in the mandatory baseline level of regulation Section 504 is seeking to implement, this could still be done through an additional voluntary training and credentialing system that goes beyond the regulatory baseline and that would offer reduced taxpayer penalties or audit safe harbor thresholds that would apply to taxpayers who utilize preparers who obtain additional certification.  In addition, Section 504 could go even further towards ensuring that the most economically vulnerable have access to qualified preparers by including as part of its regulatory baseline aspirational pro bono service recommendations similar to what many state bars have done with the potential for mandatory pro bono service requirements for an additional voluntary credentialing system. 

Are Section 504’s proposed changes or my additions worth the potential for increased costs that might be passed on to consumers? While this is a valid concern, Section 504 does at least a bit to address this through its prohibition on requiring preparers to use specific continuing education providers, which can help increase flexibility and reduce undue financial burdens from preparer compliance.  Section 504 could reduce the risk of costs passing through to consumers even more through targeted tax credits available to taxpayers who utilize preparers who have satisfied a particular level of training (which fiscally could make sense from the government’s perspective if the increased accuracy and compliance that would result from greater use of better trained preparers outweighed the costs associated with such training).  

Section 504 if enacted would be a significant step forward in the IRS’s ability to curtail some of the worst errors and abuses caused by non-credentialed taxpayers.  My hope is that this would also be a first step to making compliance more a competitive advantage rather than only a regulatory burden.  A future where tax preparers actively compete on their compliance records, rather than their ability to exploit loopholes, is not only desirable but achievable through a combination of baseline regulatory oversight potentially combined with additional market-driven incentives that can help produce a compliance-oriented norm shift among preparers.

Messin' with the Kid

In 1960, "Messin' with the Kid" was written in Chicago by Mel London and Junior Wells and released by London's Chief Records (which probably explains why only London was credited on the label).  As the story goes, London arrived early to pick up Wells for a recording session, and Wells's young daughter accused him of "messin'" with her father, who was nicknamed The Kid. Writing the song was a historic collaboration, eventually becoming a blues standard, although its initial release on the small Chief label, instead of the much larger and nationally distributed Chess label, probably explains why Wells did not achieve the crossover success of his contemporaries such as Muddy Waters, Howlin' Wolf, and James Cotton. Blues afficionados, of course, are well aware of Wells and his long-time guitarist and bandmate Buddy Guy, who went on to his own lengthy solo career.

Hiring Announcement: Michigan State University College of Law

From a recent email message:

Michigan State University College of Law invites applications for the new position of Assistant Dean for Professionalism, Leadership, and Bar Success. The successful candidate will lead initiatives to enhance professionalism, leadership development, and bar exam success among law students. This position is a key leadership role within the College of Law and will require close collaboration with faculty, staff, and external partners to develop and implement strategic programs that support student success.

The Assistant Dean will oversee programs that promote professional identity formation, leadership skills, and bar passage preparation. Responsibilities include designing and managing curricular and co-curricular initiatives, engaging with students to provide tailored support, and assessing the effectiveness of bar preparation efforts. The role also involves building relationships with alumni, bar organizations, and legal professionals to enhance student mentorship and career readiness.

Candidates should have a strong understanding of legal education, bar exam requirements, and student support strategies. Experience in academic success, bar readiness, or student professional development is preferred. The ideal candidate will demonstrate leadership ability, excellent communication skills, and a commitment to fostering an inclusive learning environment.

Application materials, including a cover letter, resume, and references, should be submitted through the Michigan State University careers portal here:  https://careers.msu.edu/jobs/assistant-dean-managers-east-lansing-michigan-united-states-04f43546-bf25-4084-882f-4892847f6f6a  

Review of applications will begin immediately and continue until the position is filled.

Hiring Announcement: Duquesne University, Thomas R. Kline School of Law

From a recent email message:

Thomas R. Kline School of Law of Duquesne University invites applications for the position of Associate Director and Assistant Professor of Clinical Legal Education to begin July 1, 2025. The successful candidate will be appointed as a 12-month, renewable, 405(c), non-tenure-track faculty member. The Associate Director’s primary responsibility will be to design, teach and serve as a supervising attorney for an IOLTA qualified clinic and to assist the Director of Clinical Legal Education in the daily operations and programmatic development for the Tribone Center for Clinical Legal Education. This includes assisting with oversight of the clinical program as well as coordinating within internal and external partners to enhance the clinical program.

An IOLTA qualified clinic is one that provide services for civil legal needs of low-income individuals. The clinic must provide direct legal services for actions where there is no right to counsel nor can they be fee generating. We welcome applications from candidates across all areas of law that could teach an IOLTA qualified clinic. Examples of IOLTA qualified clinics include: Elder Law Clinic; Wills and Healthcare Decisions Clinic; Immigration Clinic; Landlord/Tenant Clinic; Health Law Clinic; Disability Rights Clinic; Unemployment Law Clinic; and, Employment/Labor Law Clinic. Currently, we do not have a need for a Family Law Clinic or Education Law Clinic.

Apply through Interfolio at: https://apply.interfolio.com/162895

Application review will begin immediately and will continue until the position is filled. Duquesne University uses Interfolio to collect all faculty job applications electronically. Applicants are asked to submit a cover letter/letter of intent, resume, and contact information for three professional references.  The letter of intent should include the type of clinical course they are interested in offering as well as comments on ability to teach in flexible environments, including online, hybrid, and in-person classroom settings. Duquesne University is committed to attracting, retaining, and developing a diverse faculty that reflects contemporary society, serves our academic mission and enriches our campus community. As a charter member of the Ohio, Western PA and West Virginia Higher Education Recruitment Consortium (HERC), we encourage applicants from members of underrepresented groups, and support dual-career couples.

Founded in 1878 by its sponsoring religious community, the Congregation of the Holy Spirit, Duquesne University is Catholic in mission and ecumenical in spirit. Its Mission Statement commits the University to “serving God by serving students through commitment to excellence in liberal and professional education, through a profound concern for moral and spiritual values, through the maintenance of an ecumenical atmosphere open to diversity, and through service to the Church, the community, the nation and the world. Applicants for this position should describe how they might support and contribute to the mission.  Motivated by its Catholic and Spiritan identity, Duquesne values equality of opportunity both as an educational institution and as an employer.

Hiring Announcement: Gonzaga University School of Law

From a recent email message:

GONZAGA UNIVERSITY SCHOOL OF LAW, in Spokane, WA seeks applicants for up to four full-time Visiting Assistant Professors. This position is a 9-month, terminal visiting position beginning in August 2025 with the potential to renew for one or more additional years (contingent upon need and funding). It is ideal for aspiring law professors who plan to apply to tenure-track law school positions in the future. Visiting Assistant Professors will teach about six credits per semester, and our curricular needs include first-year courses, such as Contracts, Criminal Law, Constitutional Law, Legal Research & Writing I and II, and Lawyering Skills; upper-level required courses, such as Business Associations, Professional Responsibility, and Legal Research & Writing III; and elective courses such as Secured Transactions, Health Law, Wills & Trusts, Antitrust, and Family Law.

For more information and to apply, click here.

Let's Talk Some Tax(payer Assistance and Service Act)!

Hello, and thank you for inviting me into the Lounge, in spite of my warning that doing so would subject your readers to some posts about tax policy.  To introduce myself, I direct the Philip C. Cook Low-Income Taxpayer Clinic at Georgia State University College of Law, where I also teach doctrinal tax courses and conduct research in a variety of areas of tax policy, particularly in areas in which the tax system intersects with the economically vulnerable.  Talking tax to a generalist audience can sometimes be fraught, but I think now is actually a great time for it.  This is because of some recent proposed legislation that could have a sweeping effect on tax administration if enacted, particularly with regard to whether the IRS is fulfilling its role in protecting taxpayer rights. The Taxpayer Assistance and Service Act is a sweeping legislative discussion draft coming out of the Senate Finance Committee that is aimed at modernizing and improving the efficiency of the Internal Revenue Service (IRS). The act introduces key reforms to streamline tax processing, enhance taxpayer services, and provide better assistance to individuals facing financial hardship. While there’s a lot more in this act than can be covered fully in a short visiting stint in the Lounge, I want to use my time to dive into a few provisions to illustrate how in particular they can impact the lives of the most economically vulnerable (i.e., the taxpayers who typically are represented in low-income taxpayer clinics).  For this first post, however, I thought it would be useful to provide a general overview of the Act and to discuss some initial reactions to it from both the current and former National Taxpayer Advocate. 

One of the biggest pain points for taxpayers is dealing with IRS delays and inefficiencies that have only gotten worse in recent years as the IRS faces the challenge of fulfilling its dual mission of enforcement and service while being constantly under budget pressure and with some of the most outdated computer systems in the federal government. The Act seeks to reduce these inefficiencies by requiring the IRS to scan and digitize paper-filed tax returns, reducing processing backlogs caused by manual data entry. Additionally, taxpayers will soon have access to an online dashboard that provides real-time updates on IRS backlogs and estimated phone wait times, making it easier to track their filings and refunds. To further improve transparency, the IRS’s online refund tracking tool will be upgraded to provide more detailed and personalized updates on refund status.

The Act also prioritizes better communication and support for taxpayers, ensuring they receive timely and clear information. IRS phone lines will now include callback options, reducing the frustration of long hold times. Additionally, taxpayers will be able to view images of their tax returns, notices, and other IRS communications through their online accounts. To prevent confusion and unnecessary delays, the IRS will be required to provide detailed explanations when adjusting a return due to a math or clerical error, including the relevant tax code section and a clearly stated response deadline.

Many Americans struggle to pay their taxes, and the IRS’s collection process can sometimes worsen financial difficulties. The Act introduces several taxpayer-friendly changes to mitigate these challenges. Those eligible for the Earned Income Tax Credit (EITC) will automatically have certain refund offsets bypassed to avoid economic hardship. Additionally, low-income taxpayers setting up installment agreements to pay their taxes over time will have their fees eliminated. Instead of receiving only one notice per year, taxpayers with outstanding balances will now receive quarterly updates, helping them stay informed about their obligations.

Another important component of the Act is the increased funding for Low-Income Taxpayer Clinics (LITCs), which assist individuals who cannot afford legal representation in tax disputes. The previous funding cap of $6 million per year and $100,000 per clinic is removed and more flexibility about matching requirements is added, allowing more taxpayers to access these essential services. For taxpayers facing legal disputes, the Act introduces several measures to streamline judicial processes. The Tax Court will now be able to issue subpoenas before a trial, helping resolve cases faster. To ensure fair treatment, the IRS will be required to obtain supervisory approval before imposing multi-year bans on claiming tax credits. Additionally, whistleblower protections will be strengthened, allowing those reporting tax fraud to remain anonymous while receiving clearer guidelines on award eligibility.

For U.S. citizens living overseas, the Act aims to reduce the tax-filing burden by simplifying foreign bank account reporting and adjusting currency exchange rules that affect tax calculations. Foreign tax credit reporting thresholds will also be raised, making compliance less complicated for expatriates. The Act also provides significant benefits for small business owners and freelancers. Small businesses will now have more time to opt for S-corp tax treatment. Estimated tax due dates will be adjusted to fall at even three-month intervals to align with true quarters. Additionally, a new option will allow businesses and freelancers to voluntarily withhold taxes, helping them avoid large year-end tax bills.

The National Taxpayer Advocate has expressed strong support for the Act, highlighting it as one of the most significant pieces of taxpayer rights legislation in recent history. Notably, about 40 of the 68 provisions in the Act directly stem from recommendations made by the Advocate’s office. In a public statement, the Advocate emphasized that tax administration often takes a backseat to tax policy in legislative discussions, yet it is the area where taxpayers most acutely experience the IRS’s effectiveness—or lack thereof. The Act seeks to address many of the procedural hurdles that taxpayers face when trying to resolve issues, from obtaining refunds to navigating IRS notices and appeals. The Advocate also commended the bill’s emphasis on improving customer service, reducing processing delays, and ensuring that taxpayers have a clear and accessible path to resolving disputes. While acknowledging that the legislative process remains complex and that modifications to the Act are likely, the National Taxpayer Advocate has encouraged lawmakers to prioritize its passage to create a fairer, more transparent, and more taxpayer-friendly IRS.

Former National Taxpayer Advocate Nina Olson, now Executive Director of the Center for Taxpayer Rights, has also weighed in on the Act, calling it a significant achievement for taxpayer rights. She emphasized that taxpayer rights protections often require a long legislative gestation period, but the Act represents meaningful progress in strengthening these rights. While celebrating the bipartisan nature of the legislation, Olson acknowledged that compromises were made and that some provisions could be stronger. She encouraged lawmakers and tax professionals to review the bill carefully and provide feedback to ensure it fully meets the needs of taxpayers. Olson also highlighted concerns regarding certain procedural deadlines, arguing that additional extensions for taxpayers—particularly those living abroad—would further align the bill with principles of fairness and accessibility. Despite these critiques, Olson ultimately views the Act as a strong foundation that, if passed, would be a critical step toward improving IRS administration and protecting taxpayer rights.

So, that’s the 30,000 foot overview.  There’s a lot in this Act that is deserving of comment and many more proposals than I’ve mentioned in this post.  Most importantly, much of this does not involve technical aspects of tax law that only specialists can understand—rather, it involves the aspects of tax administration that impact all of us regularly.  There will be a lot of discussion of this Act in the weeks and months ahead, and that discussion should not be confined solely to the tax bar.  There is a lot of potential here to not only to better safeguard the rights of all taxpayers but specifically to improve access to justice for the most vulnerable.  In the remainder of my posts, I’ll look at a few of the proposals in Act in detail to explain how enhancing digital services, improving customer support, enhancing low-income taxpayer clinics, and offering relief to those facing financial hardship has the potential to enable the tax system to be more socially just, particularly as it applies to the most vulnerable among us.

Law Prawfs Statement Regarding an Urgent Constitutional Crisis

Over 400 law professors have signed the Call to Urgency below.  The authors invite others to join in  here.

A CALL TO URGENCY

The opening weeks of the second Trump administration convince us, as law professors who have spent years studying the American legal system, that we are beginning to see unfold the gravest threat to the rule of law and its constituent principles – the separation of governmental powers, the independence of prosecutorial authority, the inviolability of human rights, the transparency of government action, and the sanctity of constitutional accountability itself – ever presented in our lifetimes. The president’s and his associates’ actions, and threats of action, profoundly undermine the bedrock principle of our federal government system – that the Chief Executive and his agents are constrained by the United States Constitution. The fundamental guardrails of our constitutional democracy itself are threatened and notably battered. They are, as we write, at risk of complete collapse.

We recall that Benjamin Franklin warned, when asked by Elizabeth Willing Powell whether he and his colleagues had delivered “a republic or a monarchy,” that we have “a republic” but only “if you can keep it.” We hope that all Americans, and especially all lawyers, will recognize the gravity of this situation and will be prepared to answer that challenge with the urgency required in the days, weeks, and months ahead.

Lee Fisher Named President of Baldwin Wallace University

Baldwin Wallace University has announced that its new president will be Lee Fisher.  Fisher has served as the dean of Cleveland State College of Law and was also the former Ohio lieutenant governor and attorney general.  He will assume the presidency on July 1.

Ted Afield

Ted Afield is going to be visiting with the faculty lounge blog. Afield is a professor at Georgia State University School of Law.  Aflied "serves as the Associate Dean for Experiential Education, Director of Clinical Programs, and the Mark and Evelyn Trammell Clinical Professor at Georgia State University College of Law. In these roles, he oversees the program of experiential learning at the College of Law and specifically directs the Philip C. Cook Low-Income Taxpayer Clinic, one of the the College’s seven legal clinics and one of the largest and most active low-income taxpayer clinics in the nation. ... Before his academic career, he practiced law in his hometown of Tampa, Florida, with the firms Fowler White Boggs Banker PA (now Buchanan Ingersoll & Rooney PC) and Barnett, Bolt, Kirkwood, Long & McBride (now Gunster). He also clerked for Judge Charles R. Wilson on the U.S. Court of Appeals for the 11th Circuit." He graduated from Harvard College, the Columbia Law School, and an LLM from the University of Florida.

Looking forward to the posts.