How Tax Preparers and Payers Will Be Protected

The AICPA is supporting Senate Bill 3278, which seeks to protect taxpayers by regulating tax preparers.

The bipartisan bill was proposed by Senators Rob Portman, R-Ohio, and Ben Cardin, D-Md. and is currently in the Senate Finance Committee.

In her Aug. 1 letter, AICPA Tax Executive Committee Chair Annette Nellen, CPA, CGMA, told the legislators that the AICPA appreciates their effort “to ensure a service-oriented, modernized tax administration system that earns the respect and appreciation of both taxpayers and their advisers.”

“On behalf of our members, the AICPA would like to express its support for Section 202, Regulation of Tax Return Preparers, which will help to promote good tax administration and protect the interests of the American taxpayer by protecting taxpayers from incompetent and unscrupulous preparers,” Nellen wrote. The proposed legislation authorizes the IRS to sanction tax return preparers and specifically notes their ability to revoke preparer tax identification numbers (PTINs).

“This authority will ensure minimum competency and ethical standards similar to what was required under the Registered Tax Return Preparer (RTRP) Program and allow the agency to act swiftly and efficiently to stop preparers from continuing to file inaccurate and fraudulent tax returns,” the letter states.

“At the same time, the bill protects the rights of tax advisors, for example, by requiring notice and an opportunity for a hearing prior to rescinding a preparer’s PTIN. This due process protection is essential. The bill also provides appropriate exceptions from the competency provisions for attorneys, CPAs, Enrolled Agents and individuals supervised by these professionals,” Nellen states. “We appreciate that you recognize the inherent regulatory regime within which CPAs and other legacy Circular 230 practitioners already practice, as well as the fact that CPA firms must stand, as a matter of licensure, behind the work done by the members and employees of their firms.”

Marketplace confusion is a particular area of concern, Nellen states. “The IRS does not endorse any tax preparer. However, there are instances where unlicensed tax preparers use misleading marketing tactics implying they are endorsed by the agency.

As a result, some taxpayers are confused by the different qualifications of tax preparers and the varying practice rights they possess. We therefore recommend that the bill subject unlicensed tax return preparers to the guidance in IRS Notice 2011-45, 2011-25 IRB 886, which aims to mitigate marketplace confusion and ensure truth in advertising.”

“Ensuring that tax preparers are competent and ethical is critical to maintaining taxpayer confidence in our tax system,” Nellen states. “Indeed, these goals are consistent with AICPA’s own Code of Professional Conduct and enforceable tax ethical standards.”

About Terry Sheridan

Terry Sheridan

Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.

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