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Who Speaks for the Tax Preparer?

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I recently attended the National Association of Tax Professionals’ annual year-end tax update seminar, known as “The Essential 1040.” The seminar reviewed what is new for the 2013 Form 1040 and looked at recent tax legislation, court cases, and other tax developments.

Included in the discussion of the Affordable Care Act, a.k.a. “Obamacare,” was a preview of the complex calculations for the penalty that an individual or family without health insurance coverage must pay as part of their tax liability beginning with the 2014 tax return.

As I listened to the seminar leader explain this new mess being forced upon us, it occurred to me that one of the problems with the tax preparation industry is that we do not have a national organized “voice” to properly speak for the tax preparer with Congress or the Internal Revenue Service.

As Congress continues to incorrectly use the U.S. Tax Code to administer and distribute the benefits of social welfare and other government programs, and the IRS, in response, forces more and more excessive “due diligence,” regulations, and requirements upon us, the job of the paid tax preparer becomes more and more complicated and involved. And we must just grin and bear it.

While the IRS, if not the Congress, does, from time to time, consult with its “stakeholders” on tax preparation issues, this is merely a “professional courtesy” and, I expect, does not carry much weight in the final decision-making process. The various tax preparer membership organizations do make sincere attempts to represent the paid preparer in Washington, but the different organizations may have differing agendas, and no one organization has sufficient membership to provide the proper “weight” to any kind of serious and effective lobbying efforts.

At last count there were 690,000 PTIN-holders, but the largest of the tax return preparer professional organizations, the above-referenced NATP, has only about 25,000 members.

A good example of the need for a national tax preparation industry lobbying organization is the new excessive “due diligence” requirements for claiming an Earned Income Tax Credit. Tax preparers must now also become social workers and determine whether an individual qualifies for federal welfare benefits. We have enough to do just to get a client to provide us with all the financial information necessary to properly prepare their 1040. We should not be forced to take on this added time-consuming responsibility.

While I no longer accept new clients, if I did, my personal response to the additional due diligence would be to not accept any new 1040 clients who will claim the EITC. But even if 1,000 more tax preparers joined me in this action, it wouldn’t accomplish anything other than to reduce the tax-season agita for those of us who made the decision.

If there was a central national lobbying organization representing all paid preparers -- a PTIN Society -- this organization could have perhaps gone to the IRS and said that if the new due diligence requirements are put into place its 600,000+ members will refuse to prepare tax returns that include an EITC, or just simply say that its membership strongly opposes the new requirement. The organization could have then worked with the IRS to negotiate regulations that would be acceptable to both the government and the preparer.

And this organization could campaign against the continued $63 PTIN renewal fee, which is no longer necessary due to the death of the RTRP mandatory regulation regime.

Our national “voice” could also lobby members of Congress to pass serious tax reform legislation to simplify the 1040 by, among other moves, removing the EITC and other government benefit programs from the Tax Code. Or, if Congress were considering giving the IRS the authority to regulate all “unenrolled” preparers, it could lobby for a “grandfathering” exception for experienced tax pros to any initial competency examination.

This organization would not be competition for existing membership organizations like the NATP, the National Society of Accountants, the National Association of Enrolled Agents, the National Society of Tax Professionals, etc. It wouldn’t offer CPE classes or research services or publish informative journals and newsletters. Its sole purpose would be to lobby Congress and the IRS to reduce the burden, and agita, of tax preparers.

Tax preparers need a unified “voice” in Washington, with real teeth, to speak for us. We should no longer be forced to just grin and bear it whenever the IRS or Congress attempts to make our lives more complicated.

Robert D. Flach has been a tax preparer since 1972, and blogs as The Wandering Tax Pro, as well as writing on taxes for MainStreet.com.

9 Comments

Remove the decimal points and it might be useful to have a PAC funded by $500 to $1,000 voluntary donations. Voices without money behind them are seldom heard in the halls of Congress.

Posted by: bkamman | December 10, 2013 11:01 AM

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The idea of a PAC to lobby for the interests of paid 1040 preparers (including CPAs who prepare 1040s for compensation) funded by voluntary $5.00-$10.00 contributions as part of the annual membership fee of NATP, NSTP, NAEA. NSA, etc, and even AICPA is certainly something to consider. As long as the PAC is independent of the individual supporting organizations and is not "beholding" to AICPA as a major contributor.

I may be prejudiced, but I do not believe the AICPA as an organization is interested in helping the non-CPA 1040 preparer. AICPA is only interested in perpetuating the "urban tax myth" that CPA = 1040 expert, which, obviously, is just not true. Perpetuating this myth does not benefit the paid tax preparer or the taxpayer public.

RDF

Posted by: rdftaxpro | December 4, 2013 1:07 PM

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RDF The AICPA is constantly addressing Congress and the IRS regarding new tax legislation that benefits their CPA membership, but typically benefits all preparers by proxy. However, it is unlikely that the AICPA would concern themselves with the EITC and the associated due diligence, but their lack of interest in certain tax topics should not be construed to be to your detriment. Remarkably, they currently have 386,000 members.

Posted by: v-rodcpa | December 3, 2013 3:38 PM

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Nice, Robert. Been doing returns since 1978 and have long since thought the preparer community needed a voice. We are doing the IRS auditing for them prior to filing a return or else face due diligence problems. EITC, Child Care & Education credit, to name a few, on the ever growing list we have no control over. All the prior points are valid. However, if every one of the current professional organizations added $5.00 to their dues to help fund a PAC for all, it might be beneficial. The PAC would have no other agenda than to let the preparers prepare; and, let the IRS auditors audit. The IRS needs to implement some safeguards of their own, such as not sending 10+ EITC refunds to the same address! They could practice some due diligence and professional responsibility.

Posted by: Jeanieb1 | December 3, 2013 3:26 PM

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I would join and support an organization dedicated to representing the interests of qualified tax preparers not already governed by some authoritative organization. This organization could establish credentialing requirements, in addition to lobbying for fair practice requirements. IRS should not be dictating these issues as long as there is a mostly adversarial relationship between it and tax preparers.

Posted by: taxpr0 | December 3, 2013 12:38 PM

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We do not need another organization. The current organizations, NATP, NAEA, CPA groups, and the several other Tax Clubs that I get emails from on meetings, webnairs, etc must work together. At one point, five years ago, I saw a beginning with a combined State (Ohio) Annual Conference with NATP and NAEA.... I don't know all the details of what happened, but that combo never surfaced again. I have heard some huzzas about one another, but that's just guffaw.

Any takers on formation? I'm game.

Joseph F. Kerner, MSPA, EA TAXNOW LLC

Posted by: JFKEQUAL | December 3, 2013 11:58 AM

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LW-

Thanks for your input.

(1) That would be a good idea - but the only organization with enough members to provide any real clout in combination with the other associations is the AICPA. And the AICPA has its own agenda; it only cares about protecting CPAs, often to the detriment of other "non-initialed" preparers.

(2) I have proposed an independent industry organization - see my earlier TAXPRO TODAY editorial at http://www.accountingtoday.com/news/It-is-Time-for-Independent-Certification-for-Tax-Preparers-65564-1.html.

RDF

Posted by: rdftaxpro | November 27, 2013 3:59 PM

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I don't know about all of you, but the fees I have been receiving for the preparation of tax returns is hardly worth the time and anxiety over audits, penalties and increased regulations and responsibility to assure the information given to me is accurate and truthful. That on top of the total waste of time and money with my passing the RTRP exam which the IRS did not have the authority to impose. The IRS is so overburdened with responsibility it can no longer function in the capacity for which it was formed. Now more of their burden in issuing bogus EITC to criminals and illegals will be placed on us. We might as well give it up to the big lobbied tax preparation firms who seem to get away with anything since they fund the political parties.

Posted by: hezzy | November 27, 2013 11:42 AM

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Two thoughts:

1. We need not have a single large organization of tax professionals. All we need do is have present organizations work together to jointly fund a special advocacy team in Washington.

2. But speaking of things that need to be changed for tax professionals, Enrolled Agents should be professionally responsible to an authority outside of the IRS - and perhaps other tax professionals as well (other than CPA's and attorneys supervised by state authorities). An authority within the Treasury Department, or even the Taxpayer Advocate, would be a definite improvement in this regard. Why should the fox guard the henhouse?

Lee Willard, EA, CPA

Posted by: willardtax | November 27, 2013 10:47 AM

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