Comptroller Peter Franchot and consumer advocates rallied yesterday outside a Silver Spring tax preparation business whose owner has been indicted on charges of filing fraudulent returns to urge Gov. Martin O'Malley to sign a bill that would require all Maryland tax preparers to be licensed.
"There are a large number of fly-by-night operations in Maryland who have no training, no license and no regulation," Franchot said. "It's tax season, and people look to these third parties, and they assume that when they walk into their offices they will get some protection."
But H&R Block, the largest tax preparer in the United States, contends that the bill is flawed and would lead to higher costs for consumers and the loss of thousands of jobs.
The company, which employs 2,200 tax preparers in Maryland, is asking O'Malley to veto the bill. The National Association of Enrolled Agents, which represents a group of tax preparers federally licensed by the Internal Revenue Service, also requested a veto.
O'Malley spokesman Rick Abbruzzese said the governor is reviewing a number of veto requests and statements in support of the bill.
Thomas E. Perez, secretary of the Department of Labor, Licensing and Regulation, which would implement the program, said he expects that the governor will sign the bill. Perez said that the administration had concerns about funding the program, but those issues have been resolved.
"This is an industry where there is certainly the potential for abuse, and consumers need to be protected," Perez said. "Licensing is a leverage point, and if people aren't doing their jobs, they will lose their license."
Franchot and consumer advocates held a news conference in front of Premier Tax Consultants LLC in Silver Spring. Lawrence Sperling, co-owner of the firm, was indicted by a federal grand jury this week on charges that he filed tax returns that inflated taxpayers' credits and deductions.
Sperling, who pleaded not guilty, said he did not know Franchot would be holding an event at his business. His lawyer, Timothy F. Maloney, said the case involved 15 tax returns from more than five years ago. The government alleges that Sperling played a role in those taxpayers taking undeserved deductions of several thousand dollars each.
"He is entitled to the presumption of innocence," Maloney said. "And, respectfully, we should be trying this in a courtroom and not at press conferences held by the comptroller."
Only California and Oregon regulate individual tax preparers. An estimated 6,000 tax preparers could register in Maryland if the new law is enacted, according to a fiscal analysis of the legislation. The bill would establish a state board and require that tax preparers be at least 18 years old, have a high school diploma and pass an examination that is at least as stringent as one designed by the IRS.
H&R Block supports licensing the profession and worked with a coalition trying to craft legislation, said Josh White, a lobbyist for the company. But the company objects to an exemption for volunteer tax preparers who provide free services to lower-income filers and to the testing provision, which the company contends would set the bar too high for many current tax preparers and put them out of work. Only 60 percent of those who take the IRS test pass, White said.
"They will have no choice but to seriously jack up the price of tax preparation and hire people with much greater skills," White said.
Robin McKinney, director of the Maryland CASH Campaign, said volunteers with her group undergo IRS oversight, eight hours of training and an annual examination. She said H&R Block and other commercial tax preparers hire seasonal workers and are part of the reason the state needs to raise the bar for qualifications.
"If they can't pass a test, to me that says they shouldn't be preparing taxes," she said.