Bill Would Require Some Tax Preparers to Register with IRS

A bill that is winding its way through Congress would require certain tax preparers to register with the IRS by passing a qualifying exam and annual exams afterward.

The bill would apply only to those who have prepared five or more tax returns a year and are not covered by IRS Circular 230 — mainly financial planners. The Financial Planning Association says about 17 percent of its 28,000 members provide tax preparation services. CPAs, attorneys and enrolled agents, who are regulated by Circular 230, would be unaffected.

According to Financial-Planning.com, the National Association of Tax Professionals (NATP) favors the bill for the most part as a way to distinguish competent tax preparers from fraudulent ones, but the possibility of a continuous renewal process has raised objections.

"We felt that was onerous," said Paul Cinquemani, director of member relations and business development. NATP members want more information about the level of difficulty of the original exam and the renewal exams. The association has suggested annual continuing education requirements that are similar to those required for other professional credentials.

Some observers say the IRS doesn’t need to take on the licensing responsibility as it can already take enforcement action against bad preparers.

"I remember a long time ago some discussion whether the IRS should license tax preparers. The response was really the IRS doesn’t want to be in the licensing business, and they don’t want to be giving a stamp of approval," said Alan Weiner, a partner and CPA at Holtz Rubenstein & Co., LLP in Melville, N.Y.

An AICPA spokesman said the organization hopes to have an official response on the bill — and similar ones at the state level — by early July.

Backers had originally hoped the bill would be examined by conference committee before the Fourth of July recess, but that now looks unlikely.


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