Regulating a profession by imposing conditions for admission inevitably reduces the supply potential of professionals. Therefore, a rough balance between supply and demand for professional services should be maintained.  Regulation of Tax Professionals should be similar to that of consumer protection. Demand for tax advisors will depend on development of economy, legal system and assessment of how many tax payers are required to file the returns. Keeping in mind the basic requirement of balance between supply and demand for tax advice, limitation on resources for training and education are likely to constitute the major bottleneck in the supply of tax advisors in developing & transition countries. To avoid such bottleneck, any regulation should avoid exclusive channels of access to the profession. When the main requirement is professional’s experience, the law regulating the profession should not give the profession exclusive control over quality standards, but should share this control with the government, enabling the latter to keep channels of access open. When the main requirement is a diploma or degree, the law should provide that the government can organize official examination for candidates without the degree, requiring the same level of competence as the examinations organized by the universities and other institution of higher learning.

The variety of functions performed by tax advisors overlaps the responsibilities ordinarily carried out by other professionals, mainly lawyers & accountant’s viz. “practice of law” and “practice of accounts”.  Because legal, accounting & tax services are closely connected, it is desirable to approximate certain professional rules, which the government should reduce to writing in the law to be framed for Tax Professionals and specifically recognize/allow the members of related professional body to have membership herein. The extent of regulation of the tax profession differs from country to country. Three general approaches that can be identified are (1) Full Regulation Model, (2) Partial Regulation Model and (3) No Regulation Model.

(1) Full Regulation Model : followed by USA, governed by US Treasury Circular No.230 of 2011 & Australia, governed by Tax Agent Service Act 2009.

In this model lawyers, accountants, tax Agents/return prepares should invariably apply for registration as per US Treasury Circular No.230 or Tax Agent Service Act of Australia Academic qualification, training & continuing education program are provided in above statute. All Tax Advisors who obtained PTIN/Tax Agent/Bas Agent should sign the return as such & accountable to Revenue Deptt.

(2) Partial Regulation Model : followed by Austria, China, Germany & Japan

In this model every Tax Advisor should obtain license with an exception to lawyers & accountants who are directly admitted. Others to become a licensed Tax Advisor must undergo prescribed program of the course and take an examination.

(3) No Regulation Model : followed by Belgium, Portugal, Spain, UK & India, the provision for tax advice and return preparation is generally unrestricted. With an exception of countries following the US or German Models, representation before tax authorities is relatively unrestricted. Non-lawyers are allowed to represent in administrative proceedings. But in view of latest verdict in the case A.K.Balaji (SC) covering both the litigious & non-litigious matter within the definition of “practice of law” in India, representation of non-lawyers in the administrative proceedings held to bad in law, null & void.

(Author is an Auditor & Tax Advocate and can be reached E-Mail: [email protected] Mobile No. +91-9035089036)

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September 2021