The comment period set by the Internal Revenue Service onthe proposed preparer registration regulations closed earlier this week, with anumber of professional groups offering their opinions.
In general, the proposed regs require return preparers,including nonsigning preparers, to apply for or renew a preparer taxidentification number, or PTIN, and exclusively use the PTIN when signing taxreturns filed after Dec. 31, 2010, and authorize the Service to prescribe auser fee for the application or renewal of a PTIN.CPAs, attorneys, and Enrolled Agents are exempt from thetesting and CPE requirements, but still must register and obtain a PTIN.
One of the main concerns voiced by the AICPA is the lackof a clear understanding of who is a "nonsigning preparer," accordingto Ed Karl, director of taxation for the American Institute of CPAs.
"There's no bright line test," said Karl."It depends on who meets thedefinition of 'preparer.'"
The consequence of falling within the definition of taxreturn preparer is more than just the requirement to obtain a PTIN, the AICPArecommended that the proposed regulations specify that the PTIN, testing andCPE requirements do not apply to nonsigning preparer-employees of CPA firms; oralternatively, not apply to nonsigning preparers working under the supervisionof a CPA, attorney, or enrolled agent.
"Weclearly support the overall goals of what the IRS is trying to accomplish -enhance compliance and elevate ethical conduct," said Karl."We have our own enforceablestandards that members have to adhere to, and we agree that the signingpreparer should register, have a PTIN number and be subject to Circular 230requirements."
The problem arises in imposing requirements on thenonsigning preparer, particularly in the case of CPA firms, he observed."For example, most CPA firms havea recent graduate with an accounting degree, who has sat for and passed the CPAexam. But because every state has an experience requirement of at least oneyear, that person may not be licensed.If he or she meets the definition of a nonsigning preparer they wouldhave to be registered, get a PTIN and be compliant with Internal RevenueService CPE and testing requirements.We feel that's not necessary or appropriate."
In a CPA firm, the CPA is the individual responsible forthe overall accuracy of the return under the preparer penalty provisions of thecode, and the CPA profession's ethics rules.
"Registration of personnel supervised by a signing CPAwould place an unnecessary financial burden on CPA firms, particularly smallerfirms, and would not improve the accuracy of returns prepared for clients ofCPA firms," the AICPA said in its comments.
"Additionally, the definition of a nonsigning prepareris based on facts and circumstances, and therefore due to the subjective natureof these proposed regulations, firms may be forced to be over-inclusive in whomust obtain a PTIN, adding additional burden to the CPA firms," it stated.
Since the regulations contemplate collecting theregistration fees for a three-year period, Karl urged that the user fees be setas low as possible so as not to be an undue burden on smaller firms.
The AICPA also recommended that preparers who registerand pass the test be referred to as "authorized tax returnpreparers," rather than a designation such as "registered tax returnpreparer," which might imply a higher degree of competency.
"'Authorized tax return preparer' is a better title andit's reasonably descriptive," said Karl."The public might confuse the term 'registered' toconnote a higher degree of professionalism than the holder has.For example, a 'registered' nurse orarchitect would have four or more years of college education, while a returnpreparer would not even be required to have a high school diploma."
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