The National Society of Accountants is protesting an obscure new tax-reporting standard that it complains flew "under the radar" when it was stealthily inserted into an unrelated piece of Congressional legislation.

The law in question is the U.S. Troop Readiness, Veteran's Care, Katrina Recovery and Iraq Accountability Appropriations Act of 2007. A provision in the act revises tax-reporting standards and could put tax preparers at odds with their clients, who would not be held to the same standards.

The NSA also argues that the Internal Revenue Service could be on the receiving end of numerous meaningless disclosures that it would be unable to adequately process.

The recent provision changes the standard for disclosures for tax preparers. Until the change, preparers only needed to disclose a tax position that did not have a "realistic possibility" of being sustained on its merits. The new law requires disclosure unless the position "more likely than not" would be upheld by the IRS. The law is intended to help the IRS root out tax avoidance schemes, such as tax shelters. Taxpayers themselves, however, are still just subject to the less stringent "realistic possibility" standard.

The American Institute of CPAs has also protested the insertion of the provision and called on Congress to fix the legislation (see AICPA Urges Congress to Change Law).

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