NSA Supports Tax Preparer Registration

National Society of Accountants president James H. Nolen testified at an Internal Revenue Service hearing that his group supports the registration of tax preparers, penalties for non-registrants and continuing education requirements.

The IRS held the hearing Thursday as one of the first in a series of forums to gather input on its plans for beefing up the regulation of tax preparers (see IRS Schedules Tax Preparer Regulation Forums). The agency plans to produce a set of recommendations by the end of the year on how to ensure uniform, high ethical standards of conduct for tax preparers.

Nolen, who also owns Nolen’s Accounting and Tax Service in Oklahoma City, said that tax preparers should be subject to testing and education requirements.

“A minimum competency exam at the front end, along with tax preparer registration, required continuing education and significant penalties for non-registrants, should be mandatory,” he said. “This should be coupled with aggressive enforcement by the IRS.”

The NSA was one of several organizations scheduled to testify at the hearing. Other groups included the American Institute of CPAs, the National Association of Enrolled Agents, the National Association of Tax Professionals, AARP, the Consumer Federation of America, the Center on Budget and Policy Priorities, and the National Community Tax Coalition and Low Income Tax Clinics.

Nolen emphasized the need to verify the education of tax preparers through testing. “If a barber or a beautician needs to pass a competency examination, then a tax preparer should as well, given that a poor effort by the preparer can have substantially worse effects on the client than a bad haircut,” he said.

But he also believes that practitioners should receive a waiver if they have already passed an accredited exam. In the early 1970s, the NSA formed the Accreditation Council for Accountancy and Taxation, whose examinations are administered by Professional Credential Services Inc., a subsidiary of the National Association of State Boards of Accountancy, the same group that administers the CPA Examination with the AICPA. ACAT examinations are psychometrically validated and are certified by the National Organization of Credentialing Agencies.

Nolen said that the examination requirement should be waived for any practitioner who passes or has passed an ACAT examination, but he acknowledged that the IRS should have the right to audit these examinations to ensure they meet whatever objective standards are set. Nolen added that examination waivers should also be granted to any individual who holds a license from a state accountancy board.