In order to represent someone before the IRS, you can now take some courses if you are not a CPA, attorney or EA that will allow you to represent a taxpayer only for the year that you prepared the return. If you disagree, you cannot appeal, so how are unenrolled practitioners skirting this?
I have a professional that I sort of mentor, whom I called the other day and she had just gotten off the phone with the IRS in regards to a payroll issue. If you are unenrolled, you can’t handle payroll issues.
I asked her how she did it, and she said that she just asked. I told her that they obviously had to look at her Form 2848 (POA) and realize that she was an unenrolled preparer. She said she didn’t know, but she got all the information that she needed.
The deeper issue is that the Practitioner Priority Service (PPS), Central Authorization File (CAF) Campuses, should all be linked together. She mentioned she had a POA and not a Form 8821, which I would get 100%. The difference between the two forms, is an 8821 allows you to get information, and a POA allows you to act on that information. When were credentials just a suggestion?
I spent about an hour on the phone with the National Association of Enrolled Agents (NAEA), explaining how things, especially the Taxpayer Bill of Rights, has just eroded. Not to mention that the Taxpayer Advocate Service (TAS) doesn’t seem to care anymore. I mean it’s so bad that on tax day, the one day when we count on the IRS to perform, their system goes down.
However, back to representation. You are representing your client’s rights and with that responsibility could come a lawsuit if you don’t know what you are doing, or you may give up confidential and limited privileged information. Not to mention that you are calling PPS, where it is a crap shoot on the level of knowledge the person on the other end has.
This opens a deeper issue, if the representative, who shouldn’t be representing their client makes a mistake, who would be culpably negligent? The representative or the IRS for not checking credentials?
I learned how to represent a client, by being thrown into the deep end. I came in one day to the partnership I worked for, and was told that I had an audit at noon. I had two hours to prepare, and I got lucky, because the Revenue Agent (RA) was retiring after our audit.
I furthered my knowledge by reading audit technique guides, and the Internal Revenue Manual (IRM). However, that wasn’t enough, I literally listened, without speaking, as the Senior Partners in my firm traded “war stories.” Since then, I have represented at least 10,000 clients before the IRS, and Appeals. I even taught myself collections.
The point is that when did the IRS stop checking credentials? I mean, I bet that I could say that I am an attorney, and make up a Bar Number, and it wouldn’t be checked.
It’s time to regulate. I am tired of having to explain my fees, in fact I quit doing it, I have my wife do it for me. Why am I more expensive? I am educated, licensed, and have 24 years of experience. I don’t get price shoppers very often, but when I do, I exit the room and my wife explains why my fees are so high.
The country’s biggest tax prep firms recruit their “talent,” by offering a six week course on how to prepare a tax return, and they end up getting hired. As you can see, we are not all the same. Force licensing for tax prep and representation.
In Loving, the SCOTUS case that ended the licensing push, the crux was that this person was a financial planner that did tax returns on the side. I am not a tax accountant doing financial planning on the side, so stick to your lane and so will I.
Craig W. Smalley, MST, EA, has been in practice since 1994. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as...