July 14, 2004
Grassley, Baucus Urge White House to Support Taxpayer Service Bill
WASHINGTON – Sen. Chuck Grassley, chairman of the Committee on Finance, and Sen. Max Baucus, ranking member, have encouraged the White House to support the Tax Administration Good Government Act, especially the provisions protecting taxpayers from any unscrupulous paid tax preparers. This comprehensive legislation includes tax administration and compliance improvements, improved taxpayer rights and protections, penalty and interest reform, modernization of the U.S. Tax Court, and simplification of the tax code.
The text of the senators’ letter to the White House follows.
July 8, 2004
Mr. Andrew Card
Chief of Staff
The White House
1600 Pennsylvania Avenue
Washington, DC 20500
Dear Mr. Card:
On May 19, 2004, the United States Senate passed the Tax Administration Good Government Act(HR 1528). This legislation provides $4 billion in tax administration and compliance improvements,taxpayer rights and protections, penalty and interest reform, modernization of the U.S. Tax Court,and simplification of the tax code. The bill is also completely offset by shutting down abusive taxshelters through increased disclosure and improving corporate governance.
The legislation includes a provision, the regulation of tax return preparers, which is critical toimproving taxpayer compliance and protections. In her annual report to Congress, the NationalTaxpayer Advocate noted that over fifty-five percent of taxpayers paid a return preparer to preparetheir 2001 Federal income tax returns. Her report also noted that of the 1.2 million known paidpreparers, one-quarter to one-half are not regulated by any licensing entity or subject to minimumcompetency requirements.
One example, from the National Taxpayer Advocate, of how taxpayers can be harmed by taxpreparers who lack basic standards of expertise and competence is of a married couple with twochildren. Their tax preparer advised the couple to file two tax returns, each claiming head ofhousehold status, each claiming one child, and each receiving the earned income tax credit becauseboth spouses worked and contributed to household expenses. After the IRS audited the taxpayers,they owed over $4,000 and had no means to pay. This real-life example demonstrates how incometax return preparers are important to our voluntary tax compliance system. We believe that regulationof paid preparers will better serve taxpayers and result in increased compliance through greateroversight over paid preparers.
By improving the accuracy of tax returns at the front-end of the process, we are taking a significantstep toward reducing government burden and intrusion on taxpayers. We look forward to theAdministration’s support of the Tax Administration Good Government Act, and particularly theregulation of paid preparers provision.
Charles E. Grassley