Thursday, October 28, 2010


In the keynote presentation made at the AICPA Fall Tax Meeting in Washington DC, IRS Commissioner Douglas Shulman announced –

“. . . we are creating a Return Preparer Office inside of the IRS that will be led by David R. Williams, who is familiar to many of you for his work on the return preparer initiative. He will report directly to Steve Miller, Deputy Commissioner for Services and Enforcement.”

Shulman went on to explain -

This new office will have broad responsibility for the return preparer initiative. It will manage all of our activities related to continuing education and testing of all professionals under IRS jurisdiction. It will also manage the registration system and process, as well as coordinate resource planning for IRS efforts across the organization related to return preparers. If you have any insights, concerns and suggestions as we proceed on implementing the return preparer initiative, please feel free to contact David.”

I applaud the choice of David Williams to head this new Office. He made the rounds of the tax conferences and conventions this summer discussing the new regulation regime, and also covered the issue at the IRS Nationwide Tax Forums. I was very impressed with his presentation - and frankly wondered what someone of his caliber was doing at the IRS.

As I pointed out to David, I expect his “prowess” is a result of his tenure as a student of fellow tax blogger Mary O’Keefe of BED BUFALLOES IN YOUR TAX CODE. He has acknowledged - “and I do owe it all to Mary. :-)

I have had several email "conversations" with David on the regulation regime and the e-file mandate, some of which I have blogged about here at TWTP, and have found him to be sympathetic to the individual previously unenrolled tax preparer.

As I said in my post “You Could Have Knocked Me Over With a Feather” -

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 still have not received a response to my letter to Commissioner Shulman many months ago.

Here are some other quotes of interest from Shulman’s address –

* “Our starting point is a given: our tax system is constantly changing. With its evolutions and revolutions, it’s anything but static. The dizzying pace of change continues to accelerate with no signs of slowing down. And it’s one hard stretch of road ahead full of dangerous curves, speed bumps and unexpected hazards.
For example, the sheer girth and complexity of the tax code continue to grow, in spite of efforts to simplify it. There have been an astonishing 4,400 legislative changes to the Code from 2000 to September of this year

Everyone involved with the preparation and administration of federal income taxes agrees that the current Tax Code is a mucking fess of complexity – but nobody seems to be able to get the cafones in Congress to do anything about it.

* “Congress has also expanded the IRS’ portfolio of duties as we are increasingly asked to administer the tax portion of new social and economic programs, such as the Economic Stimulus, the Recovery Act, the HIRE Act, the Small Business Act …and now, the tax provisions of the Affordable Care Act.

The simple fact is that our job is getting harder…much harder…with no let up in sight

Shulman acknowledges that Congress continues to add welfare and other social programs to be administered via the Tax Code – but stops short of offering any opinion on whether this is a bad idea – as his processor recently did (see the WEB CPA article “Former Commissioner Blasts IRS’s Social Mission”). My readers are well aware that I am strongly against running such programs thru the 1040.

* “We are also still refining our rules for people who work in a professional firm, like an accounting firm, who prepare all, or substantially all of a return under the supervision of an accountant, enrolled agent or lawyer. While this is a tricky area, and I can’t give you definitive guidance until we publish our final guidance later this year, I will tell you that I am sympathetic to the argument that the rules should be flexible for people who have met a higher professional standard. Therefore, it is highly likely that as we implement the new rules and procedures there will be some relief for testing and continuing education requirements for people who do not sign a return and work in a professional firm under the supervision of an accountant, enrolled agent or lawyer.”

Shulman seems to be caving into the “suggestions” of the AICPA that the “lower-level” employees of CPA firms, who actually prepare the 1040s, should not be required to exhibit competence and remain current due to the “supervision” of the signing CPA.

Some 30+ years ago I was one of those lower-level employees preparing 1040s at a then “big eight” CPA firm – and believe me I got absolutely no “supervision” from the signing CPA, or any CPA in the chain, or received any tax training from the firm. Luckily I was experienced in tax preparation before they hired me (actually the staff CPAs would come to me with their tax questions).

The CPAs themselves do not have to show any competence or currency in 1040 preparation, as we previously “unenrolled” preparers must do. It appears that the AICPA wants all employees and partners of CPA firms to be exempt from the reason for implementing a registration regime in the first place.

Let’s hope that any relief from testing and continuing education requirements is the most minimal.

* “We are also still working on a start date for testing, and an effective date for the 15 hours of continuing education. Some of those commenting encouraged us to slow down or delay these important parts of the program. While we are moving forward to put in place continuing education, we recognize the need for a staged transition to reduce burden and uncertainty. Therefore, during the first year of implementation, we intend to waive the requirement for continuing education. This will give us time to work through the many issues regarding CE, including working with third parties who already certify CE courses to attempt to leverage their infrastructure.”

It seems that it will take some time before the CPE and testing components of the RTRP designation will be phased-in.

Shulman ended his presentation –

So here we are … an IRS that is working smarter and evolving to meet today’s and tomorrow’s changes and challenges. To do so, we must be open and welcoming of new ideas and forge new relationships with taxpayers and other stakeholders. We must look for opportunities to make the best use of resources, including leveraging the enormous reservoir of expertise and experience that is infused throughout the professional tax community. And we must be willing to innovate as we seek continuous improvement and work on some of the country’s most difficult and interesting problems.”


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