The American Institute of CPAs, in a letter to the Senate Finance Committee dated Sept. 15, 2015, commended the committee for its efforts to combat identity theft and tax fraud in the Chairman’s Mark of a Bill to Prevent Identity Theft and Tax Refund Fraud, but spelled out concerns regarding the bill’s provision granting broad authority to the Treasury and the IRS to regulate paid tax return preparers.
AICPA Tax Executive Committee chair Troy Lewis noted that in order to prevent potential overregulation, unnecessary administrative costs, marketplace confusion or other unintended consequences, the AICPA recommends that Congress prescript language that grants the IRS the specific authority necessary to address the concerns of incompetent and fraudulent, currently enrolled tax return preparers. At a minimum, he said the AICPA encourages Congress to limit the IRS’s authority to require a PTIN, and to require the IRS to take steps to mitigate marketplace confusion.
Specifically, the AICPA opposed an increase in tax return preparer penalties under Code Sections 7216 and 6713.
“The focus of efforts to curb identity theft should fall squarely on the causes of identity theft,” the letter stated. “The true cause of identity theft does not stem from inappropriate behavior by tax return preparers. Tax-related identity theft is typically committed with the personal information of individuals who have no filing requirements.”
The letter noted that there are already numerous other severe criminal penalties that can be imposed on identity theft crimes that are committed by return preparers.
The AICPA’s primary focus is its opposition to the proposed bill’s grant of unlimited authority to the Treasury and the IRS to regulate paid tax return preparers.
“We strongly urge Congress to limit the IRS’s authority to require the use of PTINs to only those
individuals who (1) sign a tax return or claim for refund, and (2) are involved in the preparation of tax returns or claims for refund, but are not supervised by an attorney, certified public accountant, or ‘enrolled preparer’ (i.e., enrolled agent, enrolled retirement plan agent, or enrolled actuary authorized to practice before the IRS under Circular 230).”
The AICPA said that this modification would exempt non-signers from the requirement to obtain a PTIN if those non-signers are supervised by an attorney, CPA, EA, enrolled retirement plan agent, or enrolled actuary authorized to practice before the IRS under Circular 230; and the supervising attorney, CPA, EA, enrolled retirement plan agent, or enrolled actuary signs the tax returns or claims for refund prepared by the individual.
The AICPA also recommended that current PTIN holders using paid advertising representing themselves as PTIN holders be required to display a statement explaining the differences between the different types of preparers, and educating the public that the IRS does not endorse any particular tax return preparer.
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