September 20, 2019

The AICPA Just Sued the IRS Over “Purported” Voluntary Tax Preparer Program

Calling it "an illegitimate exercise of government power," the AICPA has now taken their dislike of the IRS' voluntary tax preparer program to court:

The American Institute of CPAs (AICPA) today issued the statement below by AICPA President and CEO Barry C. Melancon, CPA, CGMA, regarding the filing of a federal lawsuit in the U.S. District Court for the District of Columbia.  The lawsuit challenges the Internal Revenue Service’s (IRS’s) new rule regulating tax return preparers.

“The AICPA has been a steadfast supporter of the IRS’s overall goals of enhancing compliance by tax return preparers and elevating ethical conduct. However, the IRS’s new rule regulating tax return preparers is an unlawful exercise of government power.

By implementing a purportedly “voluntary” program that is mandatory in effect, the rule is an end-run around Loving v. IRS, a federal court ruling which struck down the IRS’s earlier attempt to regulate tax return preparers. The IRS simply does not have the authority to proceed with the new rule. By doubling the number of categories of tax return preparers to eight, the rule will also confuse consumers. Worse yet, the new rule will do nothing to address the problem of unethical or fraudulent tax return preparers – which should be a top priority.

As a result, the AICPA has filed suit in federal court to prevent the IRS from moving ahead with this unjustified and unlawful program.

The IRS should withdraw the new rule, consult with stakeholders, and use the tools and data already at its disposal to monitor unethical tax return preparers. At a minimum, the IRS must conduct a legitimate notice-and-comment rulemaking before proceeding.”

One big issue the AICPA has with the program is that it is "purportedly" voluntary (their word, not ours), when in fact it is more like strongly suggested if not required:

[T]he new rule is de facto mandatory because it creates a strong competitive incentive for unenrolled tax return preparers to comply. Indeed, Commissioner Koskinen and the IRS have admitted as much. Commissioner Koskinen stated that the Record of Completion and place in the Directory of Federal Tax Return Preparers will enable those who successfully complete the program “to stand out from the competition by giving them a recognizable record of completion that they can show to their clients.”

You can read the AICPA's gripe as filed in U.S. District Court here:

 

AICPA v IRS

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