Without much fanfare, the Internal Revenue Service has created a potential stimulus program for tax educators. The IRS mandated that all individual and small-business tax preparers pass a basic competency test and complete 15 hours of continuing professional education in tax and ethics.
Chuck McCabe, CEO of the Income Tax School in Richmond, projects that the requirement will enable his business to grow from $800,000 in annual revenues to more than $20 million in the next five years. The school offers more than 40 online, self-paced courses in income tax topics. Last year, more than 5,000 students were enrolled.
“We feel like we are extremely well positioned to help people satisfy the IRS requirements because most schools that offer continuing education are focused on more advanced topics and are not providing the basic training that we provide,” says McCabe.
Founded in 1989, the Income Tax School was originally a training arm of McCabe’s tax preparation business, Richmond-based Peoples Income Tax. Market demand eventually led the company to offer its training to outside students, and to begin publishing student texts and instructor manuals.
McCabe says that demand for tax courses already is on the rise — a result of students seeking a new career because of the recession. Between May and December, student enrollment increased by 65 percent.
The IRS estimates that 900,000 to 1.2 million professional tax preparers will have to register with the agency and undergo screening.
McCabe believes his school can capture at least 10 percent of that market. To prepare for the growth, he has been hiring new instructors and curriculum developers.
McCabe expects new competitors such as tax software manufacturers and academic institutions to compete for the tax school market. “Our challenge is to maintain the ‘first mover’ advantage,” he says. “We have it now and we don’t want to lose it.”
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