January 16, 2019

AICPA Backs Down From Its Longstanding Beef Against Tax Preparer Regulation

Happy tax preparer

In what could easily be the longest-running turf war in accounting history, the AICPA has softened its view on IRS regulation of tax preparers.

Back in 2014, I covered the AICPA’s melodramatic freak-out over the IRS suggesting a voluntary tax preparer registration scheme, which sent Barry Melancon straight to the fainting couch and the AICPA threatening “significant legal problems that may ultimately frustrate the IRS’s goals, confuse the public, and lead to litigation” if enacted. The AICPA did, in fact, sue but the suit was thrown out after the judge determined “the AICPA lacked standing and would not be harmed by a voluntary program.” Despite the AICPA behaving like a 13-year-old girl in heavy eyeliner who just got her data plan cut off if they moved forward with the voluntary preparer regulation plan, the IRS put its foot down and said, “I PAY THE MORTGAGE, WE DO WHAT I WANT.”

In 2015, the AICPA spoke out against “yet another set of rules for professional, credentialed tax return preparers” in opposition to the Tax Return Preparer Competency Act of 2015 (H.R. 4141), which would have given the IRS broad authority to regulate tax return preparers.

If the AICPA was a petulant 13-year-old drunk on pubescent hormones four years ago and a slightly obstinate teen just a year later, she’s now a more mature young adult ready to concede that maybe letting the IRS regulate tax preparers isn’t so bad of an idea.

At issue is Senate Bill 3278, The Protecting Taxpayers Act, which would “amend the Internal Revenue Code of 1986 to provide additional protections to taxpayers.” It was read into the Senate record in late July.

“Americans work hard every day to provide for themselves and their families, and, as taxpayers, the federal government works for them,” Senator Rob Portman (D-OH) said of his bill. “Too often, however, the federal government isn’t responsive to the needs of the people it serves, and the IRS has not always served the interests of taxpayers. It has been 20 years since the last significant IRS reform, and it is time to update the agency once again. The bipartisan Protecting Taxpayers Act will restructure and reform the IRS to make it more responsive and accountable to the needs of taxpayers and help restore Americans’ faith in this agency.”

A summary of the bill has yet to be posted on Congress.gov, but we can assume whatever is in there appeases the profession’s overlords at the AICPA.

From the AICPA:

In a letter to the bi-partisan bill’s sponsors, Senators Rob Portman and Ben Cardin, the AICPA stated, “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.”

The AICPA wrote that S. 3278, by authorizing the Internal Revenue Service to sanction tax return preparers and revoke preparer tax identification numbers (PTIN), would allow the agency to “act swiftly and efficiently to stop preparers from continuing to file inaccurate and fraudulent tax returns.”

Importantly, the AICPA noted, the rights of tax advisers are protected by the bill. For example, prior to a preparer’s PTIN number being rescinded, the preparer would receive a notice and have the right to a hearing.

“S. 3278 also provides appropriate exceptions from the [bill’s] competency provisions for attorneys, certified public accountants (CPA), enrolled agents and individuals supervised by these professionals,” the AICPA wrote. “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.”

In other words, the AICPA is cool with this because the IRS won’t be in CPAs’ hair double-dipping on regulation. If anyone will be affected, it will be the shady guys named Julio who do taxes out of the back of beauty salons in Los Angeles, and we all know the AICPA couldn’t care less about them.

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