Tuesday, August 4, 2009


Frank Degen spoke on behalf of the National Association of Enrolled Agents (NAEA), which represents the interests of more than 40,000 Enrolled Agents. Degen pointed out that “NAEA has been pushing for vigorous oversight of all return preparers long before most in this room—save the National Taxpayer Advocate—thought it either important or possible”.

NATP feels “that Americans who pay a ‘professional’ ought to get a professional return. We believe to meet that end federal policymakers should provide national standards for all paid return preparers.”

Included in Degen’s presentation of NAEA recommendations were the following statements -

Taxpayers would have a reasonable expectation of competency if preparers are subject to initial testing, continuing education, background checks, and strong ethical standards. The only basis for grandfathering (if any) of unenrolled preparers is passage of a competency test that the Treasury Department deemed comparable. The absence of an initial competency test could place taxpayers in a worse position than currently exists, as taxpayers will assume a preparer holding a federal license has at least demonstrated minimal competence.”

Any program should build on the existing regulatory framework and consolidate administration and enforcement under the Office of Professional Responsibility.”

Centralization would create a variety of benefits: one ethics code; coordinated exams that would allow for advancement within the profession; and standardized continuing education requirements all administered under the already existing system.”

Given the newness of the program, IRS must also be charged with raising awareness amongst the general public. Taxpayers must understand the importance of paying only licensed individuals for tax preparation as well as the requirement for paid preparers to sign returns.”

The NAEA supports registration and licensure of “unenrolled” practitioners, a required initial proficiency test with grandfathering allowed only for individuals who have taken a similar test that is acceptable to the Treasury Dept, required CPE credits, and a background check.

Click here to download Mr Degen’s presentation.

Armando Gomez, Vice Chair for Government Relations of the ABA Section of Taxation represented the American Bar Association.

The ABA told the public forum –

The Section of Taxation supports efforts to establish minimum qualifications for return preparers. Such qualifications could include examinations to test technical knowledge, competency to prepare returns, and familiarity with the standards of tax practice required of preparers. If course, examinations are not the only means for assessing competence. Regulated Professionals who already have demonstrated competence through education and licensing, as well as paid preparers who have satisfactorily completed competency examinations in States such as Oregon that administer such examinations as part of their preparer regulatory regimes, could be deemed to have demonstrated the minimum competence to prepare returns going forward.”

Gomez suggested a two-tier licensing program, similar to Oregon, with less experienced preparers required to work under the supervision of more experienced preparers for a term. He put forward the idea of possibly two tests – an initial basic exam for “true beginners” and a more comprehensive one after the “apprenticeship” period.

As for CPE - “The Section of Taxation also supports mandatory continuing education in order to maintain the ability to prepare returns going forward.”

Among the concluding observations of the ABA –

A well-designed and administered program that (i) establishes minimum qualifications and continuing education requirements for paid preparers, (ii) requires registration of all paid preparers, and (iii) enforces the rules imposed under the Code and Circular 230, will go a long way toward ensuring integrity in the tax system.”

And finally, “the Section of Taxation encourages the Service to use public service announcements, its website, and other publicity to acquaint preparers and the public with the actions it implements to improve the quality of return preparation.”

The ABA joins the previously discussed organizations in supporting registration and licensure of “unenrolled” practitioners, supports an initial proficiency test with exemption for already regulated preparers, and requires CPE credits.

Click here to download the ABA presentation.

AICPA: Existing Law Sufficient to Regulate Preparers” from the Journal of Accountancy, the flagship publication of the American Institute of Certified Public Accountants, reports on the AICPA’s position.

According to the article the Chaiman of the AICPA Tax Committee told the IRS forum, “The IRS already has authority to regulate currently unlicensed tax return preparers without additional legislation”.
The CPA organization also believe that already licensed preparers—CPAs, attorneys and enrolled agents—“should be exempted from any new federal regulatory regime covering currently unlicensed preparers”.
I could not find any reference on the AICPA website to the presentation made by AICPA at the public forum.

So the AICPA remains the only membership organization that is against the registration and licensure of “unenrolled” tax practitioners. The reason why is not hard to understand. See my previous post “SO WHY DOES THE AICPA OPPOSE REGULATION OF UNENROLLED PREPARERS?”.

With the obvious exception of the CPAs, each organization called upon supports the registration and licensure of tax preparers. All agree that some kind of proficiency test and annual minimum continuing education should be required. While each supportive group would allow some sort of exemption to already state-licensed practitioners, the National Association of Tax Professionals most clearly sees the logistic and other problems that come with requiring all existing unenrolled practitioners to take a test and calls for some kind of real exemption or grandfathering procedure. Only the American Bar Association implies that qualified outside education could exempt someone from the federal test, similar to the suggestion of Charles McCabe of The Income Tax School.

It is a bit funny how just about each organization that supports regulation has thrown in a somewhat selfish condition. NATP suggests that current members of tax organizations like NATP be exempt from the initial proficiency test. The NSA would exempt from testing those who have already passed their own in-house tax-credential test as well as state-licensed Public Accountants. EAs must undergo a federal background check as part of their enrollment process, so the NAEA would subject all newly licensed practitioners to this intrusive requirement. And when the AICPA does address the issue it want to make sure that CPAs are “exempted from any new federal regulatory regime covering currently unlicensed preparers”.
It is interesting to note that a few of the representatives mentioned that a better way to help to reduce the Tax Gap is to declutter the Tax Code and make it less complicated.


1 comment:

Tom said...

Let me say that while I agree to what Jeff Beckley, CPA (SO WHY DOES THE AICPA OPPOSE REGULATION OF UNENROLLED PREPARERS?)says about we should all really be against adding further bureaucracy and expense to our industry and the taxpayers we serve. As much
as I firmly believe in small unintrusive government, we lost that battle long ago and we have to realize that somewhere, sometime licensing, etc. 'unenrolled' preparers is going to happen.

I think it's going to be based on how Oregon does it, only because that is up and running and the layout is successful and readily adaptable for Federal use...

Comments, suggestions, criticism, approvals, etc. is all being gather together and I would guess by mid tax season next year plans and rules will be announced as to what we all will have to do to continue our profession.

I stick to my guns and say that I want ALL (except EA's) to have same testing and license. CPA's actually should be happy, this would give them a chance to add more letters to their name...