AICPA Opposes IRS Voluntary Tax Preparer Certification

The American Institute of CPAs is pushing back against a proposal by Internal Revenue Service Commissioner John Koskinen to offer a form of voluntary tax preparer certification after a series of court rulings invalidated the IRS’s efforts to require mandatory testing and continuing education of preparers.

Last week, the IRS missed a deadline to file a petition with the Supreme Court to overturn district and appeals court rulings that the agency had overstepped its statutory authority in imposing its Registered Tax Return Preparer program (see IRS Drops Further Appeals of Court Decision Invalidating Tax Preparer Regulation). Koskinen has said that the chances of getting the Supreme Court to review the case, known as Loving v. IRS, were unlikely. He now favors offering a voluntary form of certification if Congress fails to give the IRS the authority to regulate tax preparers, which seems unlikely given the current mood on Capitol Hill toward the IRS.

At the AICPA’s Spring Meeting of Council in Scottsdale, Ariz., AICPA president and CEO Barry Melancon said Monday he plans to talk with Koskinen on Tuesday to explain the AICPA’s opposition to a voluntary form of tax preparer regulation.

“It was our hope, based on a meeting that we had at the IRS, that they would not go forward with a proposal in this area,” he said. “Congress is not going to give them authority, which it would take to make it a mandatory system. It now looks like the IRS is absolutely set on going forward with a voluntary tax return preparer registration system, which we believe fails just about all of the objectives that were stated. It’s not going to root out bad preparers because if you’re a fraudulent preparer, [taxpayers are] not going to find out from a voluntary system. It’s not cost effective. It actually takes resources away from some of the service issues that the IRS is facing right now with taxpayers and tax preparers. And frankly, it’s contrary to what the court decision basically said.”

While the court rulings left in place the IRS’s Preparer Tax Identification Number registration system, the AICPA believes it has a better approach to regulating unlicensed tax preparers.

“The fifth point is that we believe that an enhanced or modified PTIN system can actually meet the objectives that they’re trying to create, without creating a new bureaucracy associated with a whole new system that, in the end, we believe will cause confusion in the marketplace because it really won’t mean what the IRS believes a registration process and a certificate from the IRS would mean,” said Melancon. “We are very concerned about the mess that would come out of that being used as a legislative impetus to try to get legislation going forward. Our Tax Executive Committee and our tax staff have been very active on this issue. We’ve had some meetings with the IRS. Frankly, we’re concerned about process as much as anything else.”

Melancon said he is concerned that the IRS is moving too quickly without listening to much feedback, which he noted is different than the approach the IRS has previously taken on such issues. He plans to bring that up in his conversation Tuesday with Koskinen.

“I actually have a conference call with the commissioner tomorrow afternoon to discuss this issue and to make very plain our concerns not only with substance but also with the process on this particular issue,” he said.

Melancon added that the AICPA’s proposals on the federal PTIN system could also function at the state level.

“We believe that our PTIN solution that we have proposed actually would work for a state answer as well, where they could just hook into the PTIN issue and not have to have a replicated environment in the states,” he said.

Melancon said the AICPA has also been asking the IRS to provide more resources for practitioners when they need help. “We know the practitioners have said it’s been a pretty bad tax season because of the inability to interact with the Service,” he said. “From that standpoint, it’s a resource issue, so on the one hand we have concerns about the registration system, but on the other hand we’re actually advocates for the IRS to getting a different resource answer to be able to enhance these issues.”

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