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US Accountants Warn On Voluntary Return Preparer Program

by Mike Godfrey,, Washington

28 May 2014

In a recent letter to Internal Revenue Service (IRS) Commissioner John Koskinen, the American Institute of Certified Public Accountants (AICPA) has expressed its opposition to the voluntary United States tax return preparer regulation program that the agency is planning.

The IRS was blocked from implementing a nationwide licensing scheme and mandatory regulatory requirements on tax return preparers by the US Court of Appeals for the District of Columbia Circuit in Loving v. IRS (No. 13-5061).

However, the AICPA has "deep concerns with regard to a voluntary system, and the speed with which the IRS is moving to implement such a system," AICPA President and CEO, Barry Melancon, and Chair of its Tax Executive Committee, Jeffrey Porter, wrote. "We believe a voluntary program would create confusion regarding the relative proficiencies of the various types of preparers. In addition, the proposed voluntary system would undoubtedly leave the impression among most taxpayers that certain tax return preparers are endorsed by the IRS."

They called into question the proposal's likely effectiveness: "As a practical matter, any voluntary regime constructed would still not address the problems with unethical and fraudulent tax return preparers." Their letter criticized the process the IRS is using and how quickly it is proceeding: "We are concerned that the IRS is rapidly moving forward without widely disseminating the proposal or seeking public comments."

Instead of the proposed voluntary program, Melancon and Porter recommended that "the IRS should focus its efforts on utilization of the current preparer tax identification number (PTIN) program, and increased taxpayer education."

They noted that the Loving court decisions kept in place mandatory registration of paid tax return preparers and the issuance of unique PTINs, which will allow the accumulation of important data on activities of specific tax return preparers, as well as classes of preparers, in a way that should allow the IRS to tailor compliance and education programs in the most efficient manner.

"We urge the IRS to utilize the current PTIN program to track preparer activity, identify patterns of fraud and incompetence across returns prepared by specific individuals, and to institute compliance programs to deal with incompetent or unethical preparers," they added. "A voluntary system would not accomplish this goal."

TAGS: individuals | court | compliance | tax | business | tax compliance | law | Internal Revenue Service (IRS) | tax authority | education | licensing | United States | regulation | individual income tax | Tax

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