Washington (July 15, 2004) - While the American Institute of CPAs supports the concept of tax preparer regulation, it raised some public policy and drafting concerns about the registration proposal in S. 882 (H.R. 1528), known as the Tax Administration and Good Government Act, which passed the Senate in May.

In a letter to Congress, AICPA Tax Executive Committee chair Robert A. Zarzar noted that the registration proposal is a partial response to the high error rate associated with earned income tax credit claims and consumer protection concerns with refund anticipation loans. However, the letter stated, “direct approaches will better resolve these enforcement and consumer protection issues and result in more tangible increases in compliance levels than a preparer registration process alone might yield.”

The AICPA also urged Congress to enact legislation that would directly attack the fraud and abuse inherent in EITC claims, and that would restrict or prohibit refund anticipation loans.

The AICPA noted that a public relations campaign envisioned by the proposal to educate the public about a new classification of federal tax preparers would be to the detriment of other tax professionals such as CPAs, enrolled agents and attorneys. Moreover, it said, such a campaign “would likely confuse the public about who is a qualified tax professional, particularly with respect to the enrolled community and other licensed individuals under Circular 230 who have qualified for their profession based on a difficult competency examination -- unlike the much less rigorous examination apparently envisioned by the legislation.”

Instead, the AICPA recommended that Congress review the current Electronic Return Originator application process, and how that process might overlap or duplicate a “limited” registration process for tax return preparers, to see if the current list can be used or expanded without the need to create a new list.

-- WebCPA staff

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