Fingerprinting too Costly and Burdensome; Should Not be Only Option for Background Checks of “Supervised Employees,” AICPA Tells IRS

October 13, 2011

The American Institute of Certified Public Accountants said the cost and burden of the Internal Revenue Service’s proposed fingerprinting requirement is an important concern in testimony Oct. 7.  The proposed user fee regulations would further implement the IRS’ tax preparer oversight program. 

“We have serious concerns regarding the level of burden that the user fee regulations will place on CPA firms, primarily small and medium-size firms,” Patricia Thompson, chair of the Tax Executive Committee, said. 

Thompson’s testimony focused on the fingerprinting requirement for nonsigning staff working under the supervision of a CPA, and she said the IRS should instead consider an alternative that would allow CPA firms to use a consumer reporting agency regulated by the Federal Trade Commission to learn of any felony histories of their supervised employees.  Under that scenario, Thompson said, the costs per applicant would be significantly below what the IRS is likely to charge, and less burdensome to implement.

The IRS estimated 70 percent to 80 percent of the roughly 450,000 individuals who would be affected by the fees are operating as, or employed by, small entities and that the cost for fingerprinting will be between $60 and $90 per applicant.  

The preamble to the proposed IRS regulations indicates that the IRS does not intend to fingerprint CPAs at this time, but specifically requests comments on whether CPAs and others should be exempt.  Thompson strongly reiterated the AICPA’s position that CPAs should remain exempt from fingerprinting because they are already regulated by state boards of accountancy and subject to state ethical and competency rules, a point she also made in the AICPA’s Oct. 7 comment letter to the IRS.

“The AICPA strongly believes that CPAs should continue to be exempt from the fingerprinting process because it is redundant to the suitability process performed by the 55 state boards of accountancy that regulate CPAs in the United States and territories,” Thompson said.  “Given the longstanding regulatory process provided by the state boards of accountancy, we do not believe it appropriate for the IRS to duplicate the cost or burden of fingerprinting CPAs.”

In addition to proposing fingerprinting, the IRS is considering stopping the issuance of provisional PTINs after April 18, 2012. Thompson said the AICPA is concerned that if the IRS stops issuing provisional PTINs, CPA-supervised employees, especially new or temporary hires, will effectively be “benched,” and unable to do their job while their PTINs are being processed. “CPA firms need a solution that flexibly addresses their immediate staffing needs without disruption,” she said. The IRS should, at a minimum, allow provisional PTINs to be effective through Oct. 16, 2012, she suggested.

For more information about the IRS hearing and the AICPA testimony, read the Oct. 7 Journal of Accountancy story.