The American Institute of Certified Public Accountants supports the Internal Revenue Service’s program, as it is currently structured, to regulate tax return preparers, Patricia Thompson (pictured), chair of the AICPA Tax Executive Committee, told members of the House Ways and Means Oversight Subcommittee at a hearing on July 28.
“We believe the IRS should be commended for its efforts to implement the return preparer program,” Thompson said. “They listened to stakeholder concerns and suggestions, and they’ve gotten it right.”
The current IRS regulatory program reflects testing and continuing education changes sought by the AICPA, while meeting the overall goals of the program to enhance compliance and elevate ethical conduct, which the AICPA has steadfastly supported.
One of the IRS’ proposals would have subjected non-signing staff of CPA firms who are supervised by CPAs to the entire IRS regulatory regime applicable to registered tax return preparers, including testing and specific continuing education requirements. Thompson said that instead the IRS appropriately adopted a limited exemption from testing and continuing education requirements for these CPA firm employees. Consequently, the IRS program is focused on those tax preparers known as “unenrolled” preparers, who are not CPAs, attorneys or enrolled agents.
That’s important because the December 2009 IRS report on the paid tax return preparer community was triggered by compliance studies issued by the Government Accountability Office and Treasury Inspector General for Tax Administration that implicated the “unenrolled” preparer community as the source of compliance problems.
The IRS began implementing its plan to regulate tax return preparers last fall by requiring CPAs and all other paid tax return preparers to register for a unique Preparer Tax Identification Number. CPAs, attorneys and enrolled agents are exempt from the minimum competency test on Form 1040 and the IRS’ continuing education requirements for registered tax return preparers.
Thompson told the subcommittee in her testimony that the AICPA supports the following elements of the IRS’ regulatory program:
Registering paid tax return preparers and issuing them unique preparer tax identification numbers.
- Expanding the ethical umbrella of IRS Circular 230 over all paid income tax preparers.
- Creating a continuing education construct geared towards “unenrolled” preparers.
- Implementing a basic Form 1040 examination as a condition to become a “registered tax return preparer.”
AICPA Comments to IRS on Exam Developments and Approval Process for Continuing Education Providers
On July 7, the AICPA offered comments to the IRS about development of the exam the IRS is expected to begin administering this fall to prospective registered tax return preparers. The AICPA said, “We believe the examination should address problems faced by tax return preparers that might arise in the preparation of basic Form 1040 returns, including coverage of basic self-employment income. In general, we believe the competency examination should include questions which address the breadth of Publication 17, Your Federal Income Tax for Individuals. This publication addresses such topics…as filing status, personal exemptions and dependents, income, gains and losses, adjustments to income, the standard deduction and itemized deductions, and the major tax credits for individuals.”
In a related action, the AICPA made recommendations in August about procedures the IRS should follow in approving continuing education providers and courses for registered tax return preparers. The AICPA praised the IRS for dropping an earlier proposal that would have required continuing education providers to get pre-approval from the IRS before offering continuing education courses to the public. “We believe that by not mandating a course-by-course pre-approval process, the IRS will ensure that continuing education courses are timely and that the ultimate system for monitoring course quality will allow the IRS to effectively manage its limited resources,” the AICPA said.
For additional information about the AICPA’s efforts related to the IRS’ program to regulate tax return preparers, see AICPA Tax Vice President Ed Karl’s blog. More information about the July hearing is available in the Journal of Accountancy’s July 28 story. Read the AICPA’s July 6 letter to the IRS expressing its support for the program.