I
would like to take exception to some of the “Prepared Remarks of IRS Commissioner Doug Shulman at the AICPA Fall Meeting in Washington, D.C., onNov. 8, 2011”.
“From the beginning, we planned to exempt
CPAs, attorneys, and enrolled agents from the testing and continuing education
requirements as you already have more stringent testing and education
requirements.”
This
is very misleading – if not an outright lie.
The CPA exam and the bar exam are obviously more “stringent” tests, and
CPAs, and I expect attorneys, have more stringent CPE requirements in terms of
actual hours. But only EAs are tested on
federal taxation and are required to maintain CPE in federal taxation. The CPA and bar exams may have a few tax
questions, but these are, again I expect, questions on business taxation and
not on 1040 issues. This is like saying
that Architects, Medical Doctors and Engineers should be exempt from the RTRP
exam because they have already been subject to stringent testing.
There
is nothing in the CPA or bar exam that comes anywhere close to the RTRP
competency test when it comes to preparing 1040s. If the IRS will eventually require different
tests for corporate and partnership tax preparation I would very likely support
exempting CPAs from this separate test.
The
only possible reason for even considering exempting CPAs and attorneys from
testing and CPE has been mentioned, and discounted, in my earlier post on
“Practice Vs Represent”. Shulman’s
above-quoted comment is just arse-kissing horse puckey!
“But we received valuable input from
stakeholders, including the AICPA, that helped us create what I think is a
better overall final product. Let me highlight a few examples.
First, is the
creation of a “supervised preparer” category which makes a lot of common sense
to us …and to you. We refined the rules that we initially proposed to provide
greater flexibility for people who work in a professional firm and prepare
returns under the supervision of an accountant, enrolled agent or attorney.
These supervised
preparers must obtain a PTIN and renew it each year, but they will be exempt
from competency testing and continuing education requirements. You’ve been
helpful to us in determining how to define the supervised preparer category…
how to program our online system regarding it …and how we should notify the
supervisors.”
The
exemption of “supervised preparers” makes even less sense than the exemption of
CPAs and attorneys. From my experience,
albeit many years ago, the actual “supervision” by CPAs is minimal, if there is
any true “supervision” of the actual 1040 preparation. The “non-CPA” employee is the person who
actually prepares the 1040, with the CPA merely signing off on the return.
When
I was an employee of one of the at the time “big eight” firms I came across a
tax return that was prepared by a “non-CPA”, and signed-off by a supervisor
CPA, a CPA from the firm’s Tax Department, and the CPA “partner-in-charge” of
the department. The return was prepared
incorrectly.
The
“supervised” employees have no required formal training or education in 1040 preparation,
and their competence is not validated by any testing or CPE requirements.
“Second, while we want to ensure a minimum
level of competency in the preparer community, we do not want newly-registered
return preparers to oversell what this means. Therefore, we created a
disclaimer statement for individuals who will be future Registered Tax Return
Preparers. This was to ensure that registration with the IRS is not viewed as
an endorsement by the IRS.
And so,
Registered Tax Return Preparers will need to include a clear statement on any
paid advertising involving print, television or radio that ‘the IRS does not
endorse any particular individual tax return preparer’, and that more
information is available about this on IRS.gov.”
I
agree that the IRS should not “endorse” the fact that an RTRP is automatically
competent or ethical by virtue of being endowed with the initials, just as I
believe that the IRS should not in any way “endorse” the CPA or JD credentials
as being a guarantee of competence, currency or ethical conduct.
But
I do not want this “disclaimer” to in any way continue the “urban tax myth”
that a person with the initials CPA is automatically a tax expert.
A
person receiving the initials RTRP, like one designated an EA, has proven basic
competence and currency in 1040 preparation, while a person with the initials
CPA or JD has not. This should be
included in the disclaimer.
To
be fair, I applaud the Commissioner’s statement (the highlight is mine) –
“And fourth, we have received input on the
recent background check and fingerprinting proposals. While we all share the
same goal of ensuring that there is adequate due diligence on people entering
this field, the AICPA and others have made a number of important points that we
need to think through regarding how best to do this.
And so we’ve decided to hold off on fingerprinting
as we consider the issues that have been raised, and have further discussions
with interested parties.”
I
trust that Shulman refers to the fingerprinting of all registered tax preparers, and not just CPAs and attorneys.
He
also speaks of –
“Therefore, we have a comprehensive strategy
to focus on preparer enforcement and compliance. This year, we are focusing on
two categories of preparers. First, are those preparers whose clients’ returns
send out a warning signal of serious problems with accuracy and errors. We are
also focusing on those preparers who are not signing returns and identifying
themselves with a PTIN, also known as “ghost preparers.”
Shulman
talks about of sending letters to and investigating preparers “who have been identified as ‘high risk’” and “whose clients’ returns contain traits commonly associated with highly
questionable Earned Income Tax Credit claims”. And he promises “in-person visits focused on return preparers we’ve identified as ‘egregious’
with high error rates”. This is
fine, but it only one area or approach.
He
talks about “ratcheting up our efforts to
identify ‘ghost preparers’”. But
what about the letters to taxpayers with complicated or questionable “self-prepared”
returns to verify that these individuals did not engage “ghost preparers” who
did not sign the return, as promised by Dave Williams at the NATP Conference in
Austin? Taxpayers who use unregistered preparers should be penalized and fined
for so doing.
RDF
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