RALEIGH, N.C. – In the wake of studies that found that tax returns filed by paid preparers can be riddled with mistakes, the Internal Revenue Service is clamping down on the industry.

Up to now, paid tax preparers in the vast majority of states were free to hold themselves out as experts without any training whatsoever. Nor did they have to prove any minimum level of competency.

“The person who cuts your hair generally has to have a license where he or she operates and has to undergo basic testing and qualification procedures before doing so,” said David Williams, director of the IRS’s return preparer office. “How is it that the individual who has access to perhaps your most significant set of financial transactions during the course of any given year has no requirements for competency or oversight at all?”

Hence the changes. First up, beginning next month the IRS is rolling out competency tests for hundreds of thousands of tax preparers nationwide. Next year, continuing education requirements – 15 hours’ worth per year – kick in.

Industry executives are divided over whether the cost of complying with the new requirements will trigger price increases for consumers. But the de rigueur complaints about excessive regulation are noticeably absent in this instance.

“The industry has been very unregulated in the past,” said Brandon Britt, who owns four Liberty Tax Service franchises in Johnston County, N.C. “I think a certain amount of regulation is good.”

The testing that begins next month doesn’t affect all paid tax preparers. Attorneys, CPAs and “enrolled agents” – who either have already passed an IRS test or are former agency employees – are exempt. So are some tax preparers who are supervised by attorneys, CPAs and enrolled agents and whose supervisor signs the returns.

More than 700,000 people nationwide have registered with the IRS for a preparer tax identification number, and the agency doesn’t know exactly how many of them will need to take the competency test, Williams said. He estimates that 38 to 40 percent of preparers are CPAs, attorneys and enrolled agents.

Likewise, CPAs, attorneys and enrolled agents are exempt from the continuing education requirements that go into effect next year.

The IRS plans to conduct a marketing campaign urging the public to make sure their paid preparers are registered with the IRS and that they sign the returns, Williams said.

The agency is planning to add an online database so the public can easily check whether a preparer has passed the test.

“We are trying to make the public more aware of their options and make them better consumers,” Williams said.

He vowed that the agency also will go after the preparer “down the street who isn’t following the rules.”