Putting the bad tax preparers out of business is hard!

Under current law, it apparently takes a LOT for the government to make successful case that shuts down a tax preparer.

The Department of Justice (DOJ) announced on July 17 that it has obtained injunctions against 410 tax preparers in the last decade. These means that those 410 preparers are forbidden to operate tax prep businesses.

However, as far as federal law is concerned, anyone else besides those 410 preparers specifically enjoined by court order are legally within their rights to hang out their shingle as "professional tax preparers" of US income tax returns. The government estimates that somewhere between half a million and a million paid preparers operated in 2008, most of them unlicensed and unregulated.

Looking at the DOJ complaints is eye-opening. Even when a tax preparer has engaged in a large-scale pattern of systemic fraud, involving thousands of tax returns and millions of dollars in fraudulent refunds, it takes years for the IRS and DOJ to shut them down.

The right to be an unlicensed tax preparer apparently has a lot of legal protections under current law.

The right of taxpayers to be protected from the systemic fraud practiced by unlicensed preparers has much less protection under current law.

No matter who prepares our own tax return, all taxpayers suffer from the systemic fraud practiced by tax preparers, the most egregious of whom appear to come from the vast ranks of the unenrolled commercial preparers.