Friday, September 3, 2010


Wonder of Wonders, Miracle of Miracles!

On Friday, August 20th I sent an email to David Williams, Director of IRS Electronic Tax Administration and Refundable Credits and the person in charge of the new tax return preparer regulation regime who had made presentations on the new rules at both the NATP annual conference in Austin and the IRS Tax Forum in NYC, with questions and concerns about the exemption of CPAs and attorneys from the real “meat” of the regime.

I told him that he did a good job in explaining the rules in his presentations, adding – “I expect this is because you were a student of my fellow tax-blogger Mary O’Keefe”.

To my great amazement I received a reply on Tuesday, August 24th I received an email response from Mr Williams himself, which began “Sorry it has taken me so long to get back to you”!

Who would have imagined - a prompt, and substantive, direct response from a high-level IRS official – or any government official or employee on any level!

I had written to IRS Commissioner Shulman via postal mail back at the end of June (I included the text of this letter in my post “Dear Commissioner Shulman”). While I have received two (2) separate acknowledgements of my letter, neither actually from Mr Shulman, and each telling me my letter was being passed along to a lackey for response, I have yet to receive a substantive reply to my inquiry.

In his email reply David admitted – “and I do owe it all to Mary. :-)

In response to my concerns he explained that CPAs and attorneys “currently enjoy a statutory exemption from any further government-imposed requirements. I try to point out in my presentations that we are approaching this effort via Circular 230. Since we're operating within that framework, we cannot impose new requirements on CPAs or attorneys.”

This is the same excuse for this exemption that was given by Karen Hawkins, Director of the Office of Professional Responsibility, when she addressed the NATP annual conference in Austin on the subject – so maybe there is something to it.

I have put the word out for information on this “statutory exemption from any further government-imposed requirements” for CPAs and attorneys – but have received no responses yet. If you are familiar with the specific federal law or Tax Code or Circular 230 reference that established this “statutory exemption” please let me know via Comment or email (to

David’s email also briefly mentioned the recent lobbying efforts (see “AICPA Tax Vice President Tells IRS to ‘Slow Down and Get It Right’”) to exempt non-initialled employees of CPA and attorney firms, those who are actually preparing the 1040s that are signed by CPAs and barritors (not a typo - look it up). I expect that David, and the IRS, will stand firm on this issue and not give in to the AICPA or the ABA and the Congresspersons they have purchased.

I certainly thank David for his prompt and honest reply. It seems that so far the administration of the IRS new regulation regime is in good hands.

As a side note – this experience emphasizes that the best way to get a prompt and substantive response from a government agency, be it the IRS or the NJ Division of Taxation, is to email a specific person.



Hal Leahy said...

The statutory exemption for attorneys and CPAs might be 5 USC 500.

" (b) An individual who is a member in good standing of the bar of the highest court of a State may represent a person before an agency on filing with the agency a written declaration that he is currently qualified as provided by this subsection and is
authorized to represent the particular person in whose behalf he acts.

(c) An individual who is duly qualified to practice as a certified public accountant in a State may represent a person before the Internal Revenue Service of the Treasury Department on filing with that agency a written declaration that he is currently qualified as provided by this subsection and is authorized to represent the particular person in whose behalf he acts."

That section gives attorneys and CPAs a right to practice and does not give the agency any authority to limit the practice.

Robert D Flach said...


Thanks for the info!

The sections you have quoted cerainly give attorneys and CPAs the right to "represent a person before the Internal Revenue Servic of the Treasury Department" - but I see nothing in the wording that prohibits the IRS from placing reqirements for being able to prepare a 1040 for a fee.

I certainly do not question a CPA or attorney's right to represent a client before the IRS in an audit or collection procedure.

Preparing a 1040 and representing a client in legal proceedings are two different things. Only a CPA or attorney (or EA or other listed "enrolled" designation) can represent a taxpayer in legal proceedings. A RTRP cannot. But only a RTRP can prepare a 1040 for a fee - so attorneys and CPAs who want to prepare 1040s for a fee should meet the same requirements.

An EA is exempt from RTRP requirements, and able to prepare a 1040 for a fee, because the requirements for becoming an EA and maintaining status are more restrictive than those of a RTRP (in federal taxation).