The National Society of Accountants has written to Treasury Secretary Timothy Geithner and the Internal Revenue Service urging them not to agree to calls by the American Institute of CPAs to exempt non-signing preparers at CPA firms from the IRSs new tax preparer registration requirements.
The American Institute of CPAs has lobbied in recent weeks for exempting non-signing preparers at CPA firms from the new requirements (see Tax Professionals Balk at New Preparer Requirements). The NSA, however, said it opposed a proposal for exempting staff members at CPA firms from the new IRS rules, which would assign Preparer Tax Identification Numbers to all professionals involved in preparing tax returns.
The NSA is one of many organizations representing tax preparers that has worked closely with the IRS over many months to develop what we believe is a fair and equitable registration process, said NSA executive vice president John Ams in a statement. It will ensure the integrity of all tax preparers and protect consumers from unqualified preparers. Now, at the 11th hour, just before the registration process is scheduled to begin, some including the American Institute of CPAs are demanding that staff members of CPA firms be exempted from the registration requirements. This flies in the face of why this registration program was set up. The point of the new regulations is to ensure that all tax preparers are accountable for their work in preparing returns, and that should include anyone who was paid to prepare all or substantially all of a return, no matter where they may work. Ams noted that some have asked for a delay in the implementation of tax preparer examinations as envisioned in the proposal.
The AICPA believes the new IRS requirements go too far. Non-signing employees of CPA firms are indirectly regulated by the states through direct regulation of CPA licensees, as such individuals assume responsibility for the work of their employees, said AICPA vice president of taxation Edward Karl at IRS hearings last month. This builds an incentive for managing CPAs to adequately train and supervise staff contributing to the preparation of a return.
The NSA does not believe that either of these requests serves the public interest, said NSA president Donny Woods, who wrote the NSA letter sent to Geithner. We oppose any proposed loophole exempting CPA firms and their members or employees from the registration and testing requirements applicable to all other preparers. And, since the testing portion of the proposal is phased in over a period of years, we find no merit in the request for a delay.
Woods letter also noted that the NSA is unaware of any uniform definition of a CPA firm.
This can vary from state to state and there is currently an ongoing discussion among state boards of accountancy about the use of fictitious names by businesses owned and operated by CPAs, he wrote. Because of this non-uniformity, it is entirely possible that CPA firm can be something no one envisions. For example, we are aware that an individual who is a CPA owns and operates more than 40 H&R Block franchises. Would any or all of these separate offices be considered a CPA firm for this purpose? Would this be considered one firm?
Woods also asked, Why is it good for consumers or good tax administration policy to provide registration and testing exemptions for one business and not for another business providing the same service? Is it possible that those seeking a CPA firm exemption are, in reality, merely seeking a competitive advantage over other preparers?
We do not believe the IRS should use its administrative rulemaking capability to provide a competitive advantage for one business at the expense of other businesses offering the same or similar services, he added.
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