“We would have effectively LOST OUR ADVOCATE in all of these proceedings. This would have been the end of property rights in a way had it gone the wrong way.”
Very true. Under the new regulations it is questionable if a return preparer should represent a taxpayer in an audit due to the potential exposure to themselves. This potential conflict of interest for the preparer creates a situation where they must become their own advocate rather than their client’s advocate.
I have heard CPA’s tell of being threatened by IRS agents with preparer penalties if they did not cooperate.
I am not against increasing preparer standards as there were many fraudulent preparers who were ripping off the government and their clients.
The IRS is utilizing the gun control model of controlling tax return preparers. First create a registration program for preparers. Next charge an annual fee to have the privilege of preparing tax returns.
Finally, tighten the regulations so that preparer’s individual liability causes them to become defacto IRS agents or lose their right to prepare returns!
Your last point is one reason we are switching to a smaller CPA firm, I think the one we used now has morphed into an IRS tool - perhaps due to threats.
Worst thing about it? I now fall under Circular 230 rules - the same exact standards of ethics and PENALTIES that a CPA or a lawyer is subject to.
Circ 230 is not to be trifled with if you play by the rules. In reality, it can be applied fairly subjectively - judges protect lawyers and CPA’s, but not every day preparers.
Yes, there is lots of fraud - but there are few signs that the IRS is working any more diligently to resolve them proactively than the INS is working to protect our borders.