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Members of Congress Ask Treasury to Modify Return Preparer Registration Plans

 

AUGUST 11, 2010

Thirty-one members of the House of Representatives wrote to Treasury Secretary Timothy Geithner on Aug. 2, expressing concerns with aspects of the IRS’ proposal to regulate paid tax return preparers. The House members asked that the plan be modified to exempt nonsigning preparers who work for a CPA firm from the preparer registration obligations and to delay implementation of preparer examinations until the IRS can demonstrate the need for that testing.

 

In a January report, the IRS called for registration, testing and continuing education requirements for currently unregulated tax return preparers, and those recommendations were further refined in proposed regulations (REG-134235-08). Most of the new requirements would not apply to CPAs, attorneys, enrolled agents and others authorized to practice before the IRS who are already subject to Circular 230 standards of practice and standards imposed by various professional organizations and licensing authorities. However, the requirement to register and obtain a preparer tax identification number (PTIN) would apply to all signing and nonsigning preparers, including CPAs and those who work for a CPA firm. (For prior JofA coverage, see “IRS Proposes New Requirements for Return Preparers.”)

 

The letter from the members of Congress says that the “proposed extension of the preparer registration obligations to non-signing individuals working for CPA firms will impose a significant and unnecessary burden on the tax preparation work done by those firms and will result in an increase in return preparation costs for clients.” The letter says that because CPAs and CPA firms are already regulated by state boards of accountancy, the requirement that the signing preparer put his or her PTIN on a return will provide the IRS with sufficient information to monitor the CPA’s practice, without needing to impose the PTIN requirement on nonsigning preparers working for that practice.

 

The letter also expresses concern that the planned requirement that all return preparers (other than CPAs, attorneys and enrolled agents) take a competency examination will “impose significant burdens on the IRS and return preparer resources and will increase taxpayer return preparation costs without any prior demonstration of the need for such testing.” The lawmakers say that they “are also unconvinced that such testing will be effective in eliminating return preparation problems encountered by the IRS.”

 

The letter asks the IRS to defer the testing program until it has performed a study to determine how many return preparation problems are caused by return preparer incompetence and whether testing would reduce those problems.

 

In April, the AICPA submitted a comment letter to the IRS that emphasized many of the same points raised by the members of Congress. In its comment letter, the AICPA recommended that the PTIN, testing, and CPE requirements should not apply to nonsigning preparer-employees of CPA firms. Alternatively, the AICPA asks that the requirements not apply to nonsigning preparers working under the supervision of a CPA, attorney, or enrolled agent.

 

The AICPA has also raised concerns about providing preparers who are not CPAs, attorneys or enrolled agents with a “certification” based on limited qualifications, and is particularly concerned with an examination process that may cause confusion among taxpayers regarding the relative qualifications of tax return preparers.

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