IRS introduces voluntary certification program for tax preparers

BY ALISTAIR M. NEVIUS, J.D.

After failing to win court approval for its mandatory tax return preparer regulation program, the IRS in late June introduced a voluntary certification program to take its place (Rev. Proc. 2014-42). Return preparers who sign up for the program and complete its continuing education requirements will be listed in an IRS database of return preparers.

BACKGROUND

When the IRS lost its appeal in Loving, No. 13-5061 (D.C. Cir. 2/11/14), which held that the IRS does not have statutory authority to regulate tax return preparers, IRS Commissioner John Koskinen indicated that, while the IRS might look to Congress to give it authority to regulate return preparers, he was also considering a “voluntary certification” program.

In announcing the launch of the program, called the Annual Filing Season Program, Koskinen said the program “will give unenrolled return preparers a way to stay to up to date on tax laws and changes, which we believe will improve service to taxpayers.”

HOW DOES THE VOLUNTARY CERTIFICATION PROGRAM WORK?

Under the Annual Filing Season Program, tax return preparers who wish to become certified would:

  1. Hold a valid preparer tax identification number (PTIN);
  2. Complete 18 hours of continuing education from an IRS-approved provider;
  3. Have limited rights to represent taxpayers before the IRS concerning returns they prepared;
  4. Be included in a database of return preparers who were in the program;
  5. Consent to abide by the duties and responsibilities under Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10);
  6. Receive an IRS-issued certificate, called a Record of Completion.

The 18 hours of continuing education that program participants must complete will include a six-hour refresher course for tax season, 10 hours of federal tax law topics, and two hours of ethics. The program will be in place for the 2015 filing season, but it will have a phased-in requirement of 11 hours of continuing education that must be completed in 2014.

Preparers who elect to participate will be listed in a directory on the IRS website beginning in January 2015. The database will also include practitioners with recognized credentials and higher qualifications, such as enrolled agents, attorneys, CPAs, enrolled retirement plan agents, and enrolled actuaries. The directory will not include tax preparers with preparer tax identification numbers who are not members of any of the above-listed groups of preparers.

Only tax return preparers who have a record of participating in the program for that tax year will be able to represent their clients before the IRS during an examination of a return that they signed or prepared. (CPAs, attorneys, and enrolled agents continue to have unlimited representation rights.)

Tax return preparers who receive a Record of Completion will not be allowed to use the terms “certified,” “enrolled,” or “licensed” to describe their status, nor may they make representations that they are endorsed by the IRS.

Alistair Nevius is the JofA’s editor-in-chief, tax. To comment on this article or to suggest an idea for another article, contact him at anevius@aicpa.org or 919-402-4052.

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