In her annual midyear report to Congress on Wednesday, National Taxpayer Advocate Nina Olson said she wants the IRS to develop a competency exam for preparers by 2016 as part of the agency's Annual Filing Season Program.
The federal lawsuit, filed on Tuesday, said the IRS’s new Annual Filing Season Program is “unlawful” and an attempt to bypass two courts’ rulings that prevent the agency from mandating continuing education and competency testing of unlicensed tax return preparers.
According to court documents, Rene R. Lopez of Van Nuys, California, prepared and filed at least 85 fraudulent income tax returns with the IRS, claiming $130,797 in false income tax refunds, from 1998 through 2001.
The IRS on Monday issued final rules for its new Annual Filing Season Program, an initiative announced last week that will enable paid tax return preparers to voluntarily fulfill continuing education requirements and obtain a record of completion.
Recent court rulings that now prevent the IRS from regulating paid preparers have resulted in some suspended or disbarred tax practitioners being able to obtain or renew PTINs and prepare federal tax returns again for compensation.
In a letter to IRS Commissioner John Koskinen on Wednesday, AICPA officials wrote that the agency's proposed voluntary certification program would cause confusion among the tax administration and tax preparation community.
The agency decided not to file a petition with the US Supreme Court by the May 12 deadline to continue a court battle on whether it has the legal authority to mandate testing and continuing education of paid tax return preparers.
A federal appeals court panel of three judges on February 11 upheld a lower court’s ruling early last year that the IRS does not have the legal right to regulate the estimated 600,000 to 700,000 paid tax return preparers in the United States.