The IRS started their return preparer regulation back around 2009. It was severely limited by the DC Court of Appeals 2014 decision in Loving v IRS, No. 13-5061 which concluded that 31 USC 330 did not provide the IRS or Treasury with the authority to regulate return preparers as preparing a return was not representing a taxpayer before the IRS.
Since then there have been proposals to change 31 USC 330 to give the IRS the authority to regulate return preparers. A current version of such as proposal is H.R. 2702 / S. 1209, Tax Refund Protection Act. While this sounds like something else, it would change 31 USC 330 to allow the IRS and Treasury to “certify the practice of tax return preparers” and require preparers to demonstrate competency to advise and assist person in preparing tax returns, claims for refund or other submissions related to Title 26. This should enable the IRS to resume their earlier program of requiring any paid preparer who is not an attorney, CPA or Enrolled Agent to become a registered tax return preparer by passing a test and being required to meet a specified number of hours of continuing education annually before renewing their PTIN. The proposal also specifically allows the IRS to impose an annual fee for the testing and training.

The bill goes further by imposing restrictions on refund anticipation loans and adding a new obligation at Section 7813, Disclosure requirements for tax return preparers, to provide specific information about any RAL offered to the client with a new penalty at Section 6720D, Failure to meet disclosure requirements for tax return preparers.

Why is it taking so long to make this change that has been supported by the Biden* and Trump** administrations, supported by National Taxpayer Advocates Nina Olson and Erin Collins (see background in NTA 2022 Annual Report to Congress noting the NTA recommendation dates back to 2002)?

*FY2024 Greenbook, page 181 includes a proposal to expand and increase penalties for noncompliant return prep and e-filing and authorize IRS oversight of paid preparers.
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