The American Institute of CPAs (AICPA) expressed its opposition to a voluntary tax return preparer regulation program that the Internal Revenue Service (IRS) is planning in a May 21 letter to IRS Commissioner John Koskinen. The IRS was blocked from implementing a mandatory regulation program by court decisions in Loving v. IRS.
The AICPA has “deep concerns with regard to a voluntary system, and the speed with which the IRS is moving to implement such a system,” AICPA President and CEO Barry C. Melancon, CPA, CGMA and Jeffrey A. Porter, CPA, chair of the AICPA Tax Executive Committee, wrote. “We believe a voluntary program would create confusion regarding the relative proficiencies of the various types of preparers. In addition, the proposed voluntary system would undoubtedly leave the impression among most taxpayers that certain tax return preparers are endorsed by the Internal Revenue Service.”
Melancon and Porter called into question the proposal’s likely effectiveness. “As a practical matter, any voluntary regime constructed would still not address the problems with unethical and fraudulent tax return preparers.”
They also criticized the process the IRS is using and how quickly it is proceeding. “We are concerned that the IRS is rapidly moving forward without widely disseminating the proposal or seeking public comments.”
Instead of the proposed voluntary program, the AICPA recommended in the letter that “the IRS should focus its efforts on utilization of the current preparer tax identification number (PTIN) program and increased taxpayer education.” Melancon and Porter noted that the Loving court decisions kept in place mandatory registration of paid tax return preparers and the issuance of unique PTINs, which allows the accumulation of important data on activities of specific tax return preparers as well as classes of preparers in a way that allows the IRS to tailor compliance and education programs in the most efficient manner.
“We urge the IRS to utilize the current PTIN program to track preparer activity, identify patterns of fraud and incompetence across returns prepared by specific individuals, and to institute compliance programs to deal with incompetent or unethical preparers,” they stated. “A voluntary system would not accomplish this goal.”
Furthermore, Melancon and Porter wrote that “we also believe the IRS should administer the penalties and sanctions for which it currently has authority to identify and hold accountable incompetent and unethical return preparers.” They identified six specific penalties in their letter.