The National Society of Accountants and the American Institute of CPAs testified before the Internal Revenue Service on the agency’s proposals for registering, testing and requiring continuing education for paid tax preparers.

Edward Karl

NSA executive vice president John Ams testified Tuesday that the IRS should treat all paid tax preparers the same way by subjecting all of them to the requirement for Preparer Tax Identification Numbers, and not exempt those who may be subject to state regulation. Arms also said the database of PTINs should be available to the public. “A consumer should be able to access this database and look up the name of an individual to see if, as claimed, the person has a valid PTIN and is currently registered with the IRS,” he said. “A member of the public should also be able to find, and be able to print, the names of these tax professionals by state and by zip code. Certainly, keeping these names a secret does not benefit the public.”

An IRS official told a group of tax preparers at an IRS Tax Forum earlier this month that the agency is building such a database, but it may take a long time before it’s available online (see IRS Prepares Preparers for Preparer Requirements).

Arms also recommended that the database should list any relevant credentials for tax preparers, such as those issued by the Accreditation Council for Accountancy and Taxation, the Certified Financial Planner Board of Standards, and the Association of Certified Fraud Examiners. He said the credentials should all be “be subject to audit or verification by the IRS.”

In contrast, AICPA vice president of taxation Edward Karl urged the IRS to exempt non-signing employees of CPA firms from the tax return preparer requirements.

“Non-signing employees of CPA firms are indirectly regulated by the states through direct regulation of CPA licensees, as such individuals assume responsibility for the work of their employees,” he said. “This builds an incentive for managing CPAs to adequately train and supervise staff contributing to the preparation of a return.”

Karl does not believe CPA candidates should be required to pay to take a competency test administered by the IRS “as they prepare to sit for a rigorous four-part CPA exam (which covers tax).” He noted that licensed CPAs are already supervising and training the new entrants into the profession and taking responsibility for their work.

He also balked at IRS suggestions of noncompliance at CPA firms. “Does the IRS have evidence of systematic noncompliance problems at CPA firms?” he asked. “The original proposal issued in the Commissioner’s Preparer Regulation report discussed studies conducted by GAO and TIGTA regarding un-enrolled tax return preparers. The study led the IRS to propose a paid tax return preparer registration regime that applied to signing preparers, including Circular 230 practitioners such as CPAs. The report reserved the issue of whether non-signing preparers would be included within the regime, and also said the IRS would study law and accounting firms. Where are the results of these IRS studies? We believe CPAs and CPA firms should be able to consider those results prior to the imposition of this vast new regulatory regime and the associated burdens.”