Did the IRS Get the Reg. Tax Preparer Program Right?

For years, AICPA members have approached me at conferences and asked, “Ed, why doesn’t the AICPA support efforts to regulate paid income tax preparers?”  Or, “Why can’t the IRS discipline 'unenrolled' preparers under Circular 230 (the rules governing practice before the IRS)?”  

They believed that the playing field deserved a little bit of leveling for certain “players.”  They weren’t alone.  The Government Accountability Office and Treasury Inspector General for Tax Administration both issued compliance studies (cited in the IRS Commissioner’s report) that implicated the “unenrolled” preparer community as the source of compliance problems.

Well, we support those efforts now!

Why now? True, the IRS did bite off quite a mouthful with its new regulatory program and there were missteps.  But they listened and adapted and we believe they’ve gotten it right.  We believe the changes appropriately focus the return preparer regulatory program on the “unenrolled” preparer community that was implicated in the studies. CPAs (as well as attorneys and Enrolled Agents) are exempt from the testing and continuing education (CE) aspects of the program. Non-signing preparers who work under the supervision of signing CPAs, in CPA firms, are also exempt from those two aspects (this rule also applies to those working in law firms or for Enrolled Agents).

We believe that because state boards of accountancy regulate the activity of both accounting firms and individual CPAs, there is strong justification for extending the CE and testing exemptions to non-signers in CPA firms.  Commercial preparation companies, including the large chains, cannot take advantage of the non-signer exemptions because they do not qualify as CPA firms (or law or Enrolled Agent firms).  There is no adverse effect to the public; it is the right result. 

The AICPA has always been a steadfast supporter of the goals of enhancing compliance and elevating ethical conduct.  Ensuring that tax preparers are competent and ethical is critical to maintaining taxpayer confidence in our tax system.  Indeed, these goals are consistent with AICPA’s own Code of Conduct and enforceable tax ethical standards.  We also believe that structuring the program in a way that helps taxpayers understand that not all tax return preparers have the same qualifications is important. We are pleased that IRS has taken significant steps to mitigate potential confusion among consumers of tax services.

Sure, there’s a lot left for the IRS to do. And we won’t be shy about letting them know what we think.  But we are pleased with where the tax preparer program is today and want to emphasize our overall support for this program. We share the IRS’ interest in improving tax administration and protecting the taxpaying public.

Edward S. Karl, CPA, Vice President of Taxation, American Institute of CPAs.