Washington (July 29, 2004) -- The Internal Revenue Service said that it will appeal a decision by a federal arbitrator that the agency cannot raise the accounting qualifications for newly hired revenue agents.

On July 9, an arbitrator ruled that the IRS cannot raise the number of required accounting credit hours from 24 to 30. IRS Commissioner Mark W. Everson raised concerns that the decision, if upheld, will hurt the agency’s increased enforcement efforts against abusive tax shelters and other problem areas.

“To protect the public’s interest, American taxpayers deserve someone with the equivalent of a college accounting degree conducting IRS audits,” Everson said, adding, "This decision flies in the face of our efforts to strengthen enforcement.”

“If you accept the logic underlying the arbitrator’s decision -- that the higher standard is not essential -- we will be hard pressed to meet the challenges of increasingly complex schemes to hide income from IRS scrutiny,” Everson said.

In the early 1990s, the Office of Personnel Management conducted an occupational study of revenue agent position that led to the increase in accounting credits to 30 hours from 24 hours and the identification of five accounting competencies needed by applicants for revenue agent positions: basic, intermediate and advanced accounting, cost accounting and auditing. At that time, an estimated 70 percent of revenue agents met the higher standard.

The IRS began implementing the new standard in 1995, with revenue agents already in the position grandfathered in under the old standard. The challenge to the IRS action was brought by the National Treasury Employees Union.

The IRS says that almost all of the current 11,700 revenue agents already meet the 30-hour standard, and that it will continue to maintain that standard pending the appeal process.

-- WebCPA staff

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