AICPA Advocacy Continues as IRS Rolls Out Tax Practitioner Regulation, Visits

January 9, 2012

Between an expanded Preparer Compliance Initiative and the Paid Tax Return Preparer program, the Internal Revenue Service is stepping up its efforts to ensure that tax preparers are complying with practice standards and providing competent services.
Under the Preparer Compliance Initiative, the IRS sent 21,000 letters (Letter 4809)  to  preparers selected from a pool of those who prepared a large number of 2010 returns with Schedules A, C or E, and  plans to conduct approximately 2,100 compliance visits (compared to 10,000 letters and 2,500 visits in 2010).

The AICPA challenged various components of the program last year, including visits to CPAs during tax season and the process for selecting preparers.  The AICPA’s letter to the IRS offered ways to make the program more effective and in follow up correspondence, the Institute reiterated concerns about various aspects of the program.

This year, in response to the AICPA’s advocacy, the IRS indicated it will not visit CPAs after early January and the selection of preparers is intended to be more targeted.  We have received a few complaints from members that they received a letter despite their high level of expertise and compliance with standards, but to date we have not received feedback about the visits.  We are monitoring this situation closely and ask members to contact us if they have been visited by the IRS under this program. We also offer tips if such a visit is imminent as part of our resource page on this issue.

Separately, the IRS continues to implement the preparer registration program, prompting AICPA advocacy at various points. Most recently, the AICPA testified at an IRS hearing in October to outline its objections to elements of the proposed suitability check that would require fingerprinting of staff who prepare returns under the supervision of a CPA or other exempt preparer. The AICPA suggested that the IRS instead allow CPA firms to engage a consumer reporting agency that is regulated by the Federal Trade Commission to perform background checks, which would be less burdensome and costly (depending on how it is structured). 

IRS Commissioner Douglas Shulman announced this fall that the fingerprinting proposal is on hold; the agency is considering alternatives, including the one proposed by the AICPA. Based on our conversations with the IRS, we are fairly confident that any suitability check initiative will not disrupt the current filing season.