I have come across comments and statements from state CPA organizations and the AICPA itself (i.e. AICPA issues briefing on “Federal Regulation of Tax Preparers”) that, while supporting “the implementation of high professional standards for tax practitioners”, they are basically against government registration and regulation of unenrolled practitioners. The AICPA briefing mentioned above states “we are not convinced that Congressional proposals calling for the regulation of unlicensed tax practitioners will accomplish the stated objectives advanced by the proponents of such proposals”.
One wonders why the AICPA would be against the regulation of unenrolled preparers.
There is a serious misconception among the general public, and especially, it seems, among journalists, that only CPAs are qualified tax professionals. This is seen in print during tax season and throughout the year when “CPA” is used whenever the term “tax professional” or “qualified tax professional” or “competent tax professional” would be more appropriate.
When discussing tax issues we are told to “check with your CPA first”, or “be sure to consult with your CPA”, or “see a CPA” when what is actually meant, or should be meant, is “check with your tax professional first”, or “be sure to consult with your tax professional”, or “see a tax professional”.
To be sure just because a person has the initials CPA after his/her name does not mean that he/she is a tax expert. As I have said time and again - in my 37 years in “the business” I have seen more errors on tax returns made by CPAs than by any other “class” of preparer.
If unenrolled tax preparers are required to be registered, licensed, and regulated, with required initial proficiency exams and annual minimum CPE credit hours, the result would be a “licensed tax preparer” or some similar federal designation. And, presumably, only “licensed tax preparers” would be allowed to professionally prepare tax returns.
Now I am not talking about practice before the IRS. “Licensed tax preparers” would be permitted to prepare tax returns only. Practice before the IRS, I expect, would continue to be limited to EAs, CPAs and attorneys. And I also expect that EAs, CPAs and attorneys would be automatically “grandfathered” in as “licensed tax preparers”.
However, while CPAs would be exempt from any initial proficiency test, those who want to be able to prepare tax returns should be subject to the same annual CPE credit requirements as the newly enrolled practitioners. If “licensed tax preparers” are required to take 30 CPE credits in “federal income taxes” each year to maintain their status, then CPAs who want to prepare tax returns should be required to take the same credits in federal income tax topics, and not just general accounting.
Enrolled Agents already have strict CPE requirements in federal taxation. And, to be honest, I doubt very many individuals have their 1040 prepared by a lawyer – who could afford it? Tax lawyers are generally used by individual taxpayers when it comes to the area of “problem resolution” – dealing with problems resulting from faulty, or considered faulty, 1040s or collection issues.
It is my firm belief that one of the main reasons why CPA organizations are against the creation of a “licensed tax preparer” designation, via the regulation of unenrolled tax practitioners, is that this will once and for all do away with the misconception that only CPAs are qualified tax preparers. Now journalists will be saying “check with your licensed tax preparer” and “be sure to consult with your licensed tax preparer” and “see a licensed tax preparer”.
I have read credible opinions on both sides of the issue by individual CPAs, attorneys, CPA-Attorneys, Enrolled Agents and unenrolled tax professionals, and do not doubt one bit that the individuals expressing these opinions are sincere and not just self-serving. There are legitimate arguments both pro and con.
But one thing I do know is that if all tax preparers were regulated via a “licensed tax preparer” designation it would rightfully put all qualified and competent tax professionals on an equal footing in the eyes of the public, and do away with the erroneous “urban tax myth” that CPAs, and only CPAs, are tax experts.