AICPA has “deep concerns” about IRS voluntary certification of return preparers

Following the defeat in federal court of the IRS’s tax return preparer regulation program, IRS Commissioner John Koskinen has commented that the IRS should consider a voluntary certification program for tax return preparers. On Wednesday, the AICPA sent the commissioner a letter, expressing its “deep concerns” about such a program. The Institute also suggested that the IRS should better use currently available tools to identify and hold accountable incompetent and unethical return preparers.

While Koskinen has urged Congress to pass legislation authorizing the IRS to regulate tax return preparers, he told the Senate Finance Committee on April 8 that, if such authority is not enacted, the IRS is considering a program of voluntary certification of return preparers. He described this as “an interim step involving a program of voluntary continuing education” and said that the IRS believes it is “important to maintain the momentum for regulation and oversight of unregulated preparers.”

AICPA concerns center on three problems with a voluntary certification program:

• It would create confusion about the relative proficiencies of various types of preparers;
• It would give taxpayers the impression that certain return preparers are endorsed by the IRS; and
• It would not address the problems of unethical and fraudulent return preparers.

Furthermore, the AICPA is concerned that the IRS appears to be moving forward with the program without widely disseminating a proposal or seeking public comments. In its letter to the commissioner, the AICPA suggested that the IRS should focus on the current preparer tax identification number (PTIN) program and increased taxpayer education as ways to fight the problems it wants to solve through voluntary certification.

Confusion

The AICPA noted that the IRS already has a program available for return preparers who wish to be licensed by the IRS: the enrolled agent program. Validating other return preparers without subjecting them to the same regulatory responsibilities as enrolled agents would undermine the enrolled agent program. The AICPA also believes that it would be very difficult for taxpayers to differentiate between return preparers with a PTIN and voluntarily certified return preparers.

Enforcement strategy

The AICPA encouraged the IRS to implement a comprehensive enforcement strategy, instead of a voluntary certification program. Under the existing PTIN program, the IRS can accumulate data on the activities of specific tax return preparers. The AICPA urged the IRS to use the PTIN program to track preparer activity, identify patterns of fraud and incompetence, and institute compliance programs to deal with incompetent or unethical preparers.

The AICPA also asked the IRS to more narrowly define “preparer” for PTIN purposes to exclude nonsigning preparers who are appropriately supervised by a professional, licensed return preparer.

The AICPA believes that the IRS should use the penalties and sanctions already available to it under various Code sections to hold unethical and fraudulent tax return preparers accountable for their conduct.

Engagement

In its letter, the AICPA noted that when the IRS rolled out its now-defunct return preparer regulation program, the Service devoted a lot of time to listening to stakeholder concerns and suggestions, and made changes to the program as a result of those suggestions. The AICPA suggests the IRS should take the same steps in assessing whether a voluntary certification program is a good idea.

—Alistair M. Nevius (anevius@aicpa.org) is JofA‘s editor-in-chief, tax.