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Improving the quality of services offered by tax agents: can regulation assist?

Published on 01 Dec 08 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE

The practice of taxpayers using tax agents, or paid preparers, to lodge their tax returns is long standing and relatively common in many jurisdictions that rely on self assessment, including Australia and the United States (US). However, across these jurisdictions the relevant regulatory requirements vary markedly. Tax agents in Australia are currently subject to quite rigorous regulation regarding their level of education, experience and professional conduct. Further, it appears that these requirements are soon to be made even more rigorous to improve the quality of services provided by tax agents to taxpayers. In contrast, in the US in all states and territories other than California and Oregon, no educational or regulatory standards are imposed on the majority of individuals who prepare federal and state income tax returns for a fee. The performance of tax agents in Oregon, with its relatively rigorous program of paid preparer regulation, was compared to tax agents in the rest of the US (except California). Paid preparer tax returns in Oregon were found to be both more accurate and more compliant on three measures of performance: (1) math errors, (2) potential reporting discrepancies of $10 or more for interest income, and (3) audit outcomes. This finding may have important implications for Australia as it seeks to introduce further regulatory reform in this area, and for other self-assessment jurisdictions, including the United Kingdom and US, where paid preparers play a vital role in tax administration and taxpayer compliance.

Author profiles:

Prof Margaret McKerchar
Margaret is a Professor Australian School of Business, School of Taxation and Business Law, The University of New South Wales. Current at 01 May 2014 Click here to expand/collapse more articles by Margaret MCKERCHAR.
 
Sagit LEVINER
Dr Sagit Leviner is an Academic Fellow with the Tel Aviv University Faculty of Law Cegla Center for Interdisciplinary Research of the Law.
Current at November 2008


Kim M BLOOMQUIST
Kim Bloomquist is a Senior Economist with the Internal Revenue Service (IRS), Washington DC and a Visiting Research Fellow at Atax, UNSW.
Current at November 2008
Click here to expand/collapse more articles by Kim M BLOOMQUIST.
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