IRS Commissioner Doug Shulman indicated that the IRS is continuing to refine its new requirements for tax preparer registration, testing and continuing education, and announced that the IRS would waive the requirement for continuing education in the first year of implementing the new program, as well as set up a new office at the IRS dedicated to tax return preparers.

In a speech before the AICPA’s Fall Tax Meeting, Shulman referred to “transition issues” that the IRS has been encountering as it implements its return preparer initiative. One of them was what to do about Preparer Tax Identification Numbers for tax preparers who operate outside the United States and who lack a Social Security number, but prepare U.S. tax returns for their clients. In response, the IRS released a new revenue procedure with alternative ways for them to get a PTIN (see IRS Provides Workaround for Getting a PTIN).

Shulman also indirectly acknowledged the objections of the AICPA to requirements that non-signing preparers at CPA firms be subject to the new requirements. “We are also still refining our rules for people who work in a professional firm, like an accounting firm, who prepare all, or substantially all of a return under the supervision of an accountant, enrolled agent or lawyer,” he said. “While this is a tricky area, and I can’t give you definitive guidance until we publish our final guidance later this year, I will tell you that I am sympathetic to the argument that the rules should be flexible for people who have met a higher professional standard. Therefore, it is highly likely that as we implement the new rules and procedures there will be some relief for testing and continuing education requirements for people who do not sign a return and work in a professional firm under the supervision of an accountant, enrolled agent or lawyer.”

Shulman also indicated flexibility in some of the other testing and continuing education requirements, whose rules have not yet been finalized. “We are also still working on a start date for testing, and an effective date for the 15 hours of continuing education,” he said. “Some of those commenting encouraged us to slow down or delay these important parts of the program. While we are moving forward to put in place continuing education, we recognize the need for a staged transition to reduce burden and uncertainty. Therefore, during the first year of implementation, we intend to waive the requirement for continuing education. This will give us time to work through the many issues regarding CE, including working with third parties who already certify CE courses to attempt to leverage their infrastructure.”

Shulman also announced that the IRS is creating a Return Preparer Office inside the IRS to implement the initiative. The office will be led by David R. Williams, who has worked on the return preparer initiative. He will report directly to IRS Deputy Commissioner for Services and Enforcement Steve Miller.

The new office will have broad responsibility for the return preparer initiative, according to Shulman. It will manage all of the IRS’s activities related to continuing education and testing of all professionals under IRS jurisdiction. The office will also manage the registration system and process, as well as coordinate resource planning for IRS efforts across the organization related to return preparers.

The new office will work in tandem with the IRS’s Office of Professional Responsibility, which will remain a separate entity under the leadership of director Karen Hawkins.

“I see its impact being enhanced in the future to ensure that tax professionals meet the high ethical standards that taxpayers expect, need and deserve,” said Shulman.

He said the Office of Professional Responsibility would be given extra resources to investigate additional cases of improper conduct, ethical violations and other disciplinary issues involving tax professionals falling under Treasury Circular 230. “I think it’s fair to say that we could see an appreciable jump in the OPR case load in the foreseeable future as we work to ensure that all return preparers are serving the American people well,” he said.

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