Shulman: CPA Firm Nonsigning Preparer Relief Likely


In late October, IRS Commissioner Doug Shulman said the Service would probably provide relief from proposed testing and continuing education requirements for nonsigning tax preparers working under the supervision of a CPA or other federally authorized tax practitioners, such as an attorney or enrolled agent, in a CPA or other professional firm.


Shulman made the prediction in his keynote speech at the AICPA’s National Tax Conference in Washington, in which he also described other modifications to the new regulatory regime for all paid tax return preparers and its deployment timetable—some, like the nonsigning preparer relief, in response to the Institute’s concerns about the plan.


“I am very sympathetic to the argument that the rules should be flexible for people who have met a higher professional standard,” Shulman said. “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 nonsigning preparers supervised by a CPA, enrolled agent or attorney. Edward Karl, AICPA vice president–Taxation, said such a change would be welcome.


“I am very pleased with this development,” Karl said. “It recognizes that CPAs, and CPA firms, are already subject to a strong and long-standing regulatory regime.” Federally authorized tax practitioners, including CPAs, are already exempt from the testing and continuing education requirements.


Continuing education delayed. Also, Shulman said, for the first year of implementation of the new regulatory regime, the IRS will waive its new continuing education requirement for all return preparers to whom it would otherwise apply. Shulman said the delayed start for continuing education was one of several transition issues the Service is working through. He said the overall regulatory initiative will continue to move forward.


CPAs and other highly trained tax practitioners are “allies” in the IRS’ goals of “working smarter” and adapting to change, he said. Shulman pointed to the Service’s Sept. 28 deployment of its online application for preparer tax identification numbers (PTINs) as a major step toward the ultimate goal of allowing taxpayers to have greater confidence in the competence and honesty of the large group of previously unregulated return preparers, as well as enabling the Service to better track “bad actors” among them. The IRS estimates there are about 1 million paid tax preparers, he said.


AICPA’s advice and concerns. The AICPA has expressed general support for the IRS’ goals of increasing preparer accountability and competence but has also called upon the Service to reconsider the practicality of its timetable and the scope with regard to certain parts of its plan, to allow more deliberate alignment with established safeguards and to better serve the interests of efficient and orderly administration.


For example, with regard to continuing education, the AICPA and other groups had expressed doubt that, given the volume of existing courses, the IRS could timely review and approve them as required by proposed section 10.9(a)(2) of Circular 230. Accordingly, the AICPA has asked that the IRS exempt such programs offered by continuing education providers described in section 10.9(a)(12)(I) of Circular 230, including the AICPA and organizations that are members of the National Association of State Boards of Accountancy’s National Registry of CPE Sponsors. For similar reasons, the AICPA has asked the Service to delay implementation of its examination. Focusing on the rollout of registration, issuance of the PTINs and implementation of Circular 230 changes, together with compliance tracking, will allow the IRS to determine whether the added burden of testing is even necessary, the AICPA has said. The Institute also has called for some type of cost/benefit study of portions of the proposed plan, particularly with regard to testing.


In an IRS hearing earlier in October, Karl described the Institute’s concerns regarding proposed amendments to Circular 230 and the PTIN requirements (see “AICPA VP Testifies on Changes Needed to IRS Return Preparer Regulation Plan”). The proposed regulations (REG-138637-07) would bring previously unregulated preparers— the new category of what the IRS calls “registered tax return preparers”—within certain standards of Circular 230, which currently governs federally authorized tax practitioners.


Return Preparer Office established. Shulman also announced an administrative move within the IRS that he said will improve its implementation of the remaining steps of the preparer initiative. David R. Williams, director of the IRS office in charge of electronic tax administration, will head a new Return Preparer Office that will have broad responsibility for the initiative. It will manage the registration system and continuing education and competency testing of preparers. The IRS’ Office of Professional Responsibility also will have important new directives and more resources to ensure ethical and competent conduct by preparers, Shulman said.


By Tax Matters editor Paul Bonner .


More from the JofA:


 Find us on Facebook      Follow us on Twitter



Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.