Tax day 2021 is over for many Americans, but new tax law changes are already under consideration in Washington.
A section of the Biden administration's two trillion-dollar American Families Plan proposes changes when it comes to who can prepare tax returns. If passed, the legislation would require tax preparers to be licensed. Arizona CPA Bob Hockensmith says only an attorney, CPA, or enrolled agent would qualify, and that would be a big change in Arizona.
"We are the wild west, so you literally do not have to have any education. You don't have to have any license. You don't have to have any ability except hang a sign over your head that says, 'tax preparer' and you can do it," explains Hockensmith.
Of the roughly 1.2 million tax preparers working in the United States, the IRS only considers 734,000 licensed.
The Treasury Department argues, "These preparers submit more tax returns than all other preparers combined, and they make costly mistakes that subject their customers to painful audits, sometimes even intentionally defrauding taxpayers for their own benefit."
However, if nearly 40% of tax preparer jobs are eliminated, expect to pay more for the licensed professionals who do remain working in the field.
"Supply and demand, right? If you have fewer tax preparers, the demand is going to stay the same. You still have 160 million returns a year that need to be done," says Hockensmith.
Americans who do their own tax returns would not be impacted by the proposed change in the law pertaining to tax preparers.