The IRS has spent years developing what could be the most comprehensive approach to return preparer oversight in decades, yet this carefully crafted strategy appears to have been shelved indefinitely. The Servicewide Return Preparer Strategy, approved in November 2020 after two and a half years of development, represents a missed opportunity to address longstanding problems with incompetent and unscrupulous tax preparers.
The Problem That Won't Go Away
The need for effective preparer oversight has been apparent for over two decades. Research consistently shows that uncredentialed paid preparers have higher error rates than licensed preparers, enrolled agents, and even taxpayers who prepare their own returns. This problem became acute after the D.C. Circuit invalidated the IRS's comprehensive 2009 regulatory framework in the Loving decision, leaving a regulatory vacuum that has persisted ever since.
In 2018, following yet another Treasury Inspector General report criticizing the IRS's fragmented approach to preparer oversight, the agency finally convened a cross-functional team to develop a coordinated response. The resulting strategy, led by the Small Business/Self-Employed division, was designed to centralize compliance activities under a new Preparer Compliance and Enforcement office, establish a governance board, and create a tiered approach to preparer treatment with escalating consequences.
The strategy's mission was ambitious: to positively impact return preparer misconduct and compliance by implementing a service-wide approach that enhances coordination across business units while ensuring overall tax law compliance. After extensive collaboration across multiple IRS divisions, the deputy commissioner for services and enforcement approved the strategy in November 2020.
Where It All Went Wrong
The strategy's implementation appears to have been derailed by the IRS's reorganization efforts under the Taxpayer First Act. Despite having over a year to coordinate the two initiatives, the strategy team and the TFA Office worked in parallel rather than synergistically. The resulting reorganization eliminated the deputy commissioner position to whom the new Preparer Compliance and Enforcement office was to report and substantially reconfigured the chain of command for affected offices.
As recently as 2024, IRS officials told the Government Accountability Office that the strategy was being aligned with the agency's Strategic Operating Plan. However, a troubling statement in GAO's report suggests the IRS may have abandoned the idea of creating a centralized compliance organization entirely.
The tax practitioner community should be concerned about this apparent abandonment of a comprehensive solution to preparer oversight. The strategy represented years of collaborative work across IRS divisions and offered a framework for finally addressing incompetent and unscrupulous preparers who harm both taxpayers and the profession's reputation.
Rather than allowing perpetual reorganization to serve as an excuse for inaction, the IRS should prioritize implementing this approved strategy. The agency should establish the proposed governance structure, include the Taxpayer Advocate Service in future planning efforts, and build upon existing programs like the Refundable Credits Return Preparer Strategy Program that already demonstrate effective tiered enforcement approaches.
The tax preparation industry deserves clarity on oversight standards, and taxpayers deserve protection from incompetent preparers. A quarter-century of reports and recommendations should be sufficient foundation for action, not further delay.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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