Positions have hardened on the subject of tax preparer registration and the proposed regulations slated to become final before the program of registering for preparer tax identification numbers begins.
Details of the program will likely be publicized early next week. At last months hearings before the Internal Revenue Service, the American Institute of CPAs made clear its desire for an exception for CPA firm staff due to the hardship it would impose on smaller firms, the probable adverse effect it would have on small businesses, and the fact that they are already regulated by state boards of accountancy.
The CPA firms nonsigning preparers are the crux of the matter, since CPA firms typically hire part-time employees and seasonal help to work during tax season, in addition to interns and employees who are in the process of becoming licensed CPAs. Under the proposed regs, these employees would be required to register for a PTIN, undergo a competency test and meet CPE requirements.
Thats why the AICPA urged the IRS to exempt CPA firm staff from the requirements, or at least to limit the requirements to signing tax return preparers, while it considers a delay in the adoption of the testing and continuing education aspects until a benefit-burden analysis can be completed.
At the other end of the spectrum, the National Society of Accountants opposes the CPA firm exemption. In a recent letter to Treasury Secretary Geithner, it noted the lack of a uniform definition of CPA firm, saying it can vary from state to state. The NSA observed that tax preparation businesses owned and operated by enrolled agents would be subject to the same burdens cited by those seeking an exemption.
Moreover, it suggested that the enforcement role played by state boards of accountancy relates largely to the enforcement of rules for ethically dealing with clients in a professional manner and ensuring that only those who are CPAs are holding themselves out to the public as such. In most jurisdictions, peer review programs make no provision for reviewing tax preparation engagements, according to the NSA.
While the final scope of the program is not yet public, Padgett Business Services urged a middle road in a letter earlier this week to the Senate Finance Committee and the IRS.
On the one hand, a taxpayer who sits down and works with one individual throughout the completion of a return should have a reasonable expectation that the preparer is licensed and will be the person signing the return, said Roger Harris, president and chief operating officer of Padgett. On the other hand, in most tax preparation firms there are multiple people who work in that firm during tax season and perform many different roles depending on the size of the firm, the type of tax returns the firm preparers, other services the firm offers, and the type of clients the firm services.
Consequently, Harris suggests, first, that any person who can anticipate working face-to-face with taxpayers and preparing the tax return should obtain the new license and sign the return. Second, rather than sort out all of the other individuals who have some role in the process, Harris suggests a license holder be required to annually submit to the IRS the information on all people in the firm who contribute to the tax preparation process.
License holders who submit this list become responsible for the actions of all those individuals and could have their license revoked. If a license holder is found to have intentionally used a person that should have been licensed, but tried to avoid the rules by using this procedure, he or she could also have their license revoked.
The PTIN issued this year will be good for two years, but beginning in 2013 a preparer will have to be an attorney, CPA, or EA, or pass the test.
The feeling now is to give everyone a PTIN and we have two years to sort this out, said Harris. Anyone who remotely might, under anybodys definition, meet the requirements should get a PTIN and well decide between now and 2013 if some dont need it. After all, its only $64.25.
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