All “enrolled” tax preparers – Enrolled Agents, CPAs, and those who participate in the IRS Annual Filing Season Program – are required to complete a defined number of CPE hours annually or periodically to maintain their “enrollment”. The defunct IRS Registered Tax Return Preparer regulation regime also required annual ethics CPE.
The main reason for required annual ethics CPE can be traced to the Enron scandal. Bureaucrats somehow believed that the CPAs who created the Enron scams would have miraculously become honest and ethical, and would never have attempted to defraud the government, if only they had sat through a 2 hour session explaining ethics.
These bureaucrats seem to feel that unless tax preparers are forced to sit through at least 2 hours of redundant ethics preaching each and every year they will suddenly begin to create large fictional employee business expense deductions for clients, or add erroneous dependents and false EIC claims, to client 1040s.
Ethics is defined as “moral principles that govern a person's behavior or the conducting of an activity”. Ethical behavior is really just common sense. Basic ethics is taught by our parents, in school, and in Sunday School, Hebrew School, and the equivalents of other religious organizations. The specific ethics of individual trades and professions – legal ethics, medical ethics, ethics related to accounting, architecture, and engineering – are imparted in the formal education for that trade or profession.
I have been preparing 1040s for 45 years. If I ain’t “ethical” by now, having 2 hours of preaching thrust upon me isn’t going to suddenly turn me honest.
Come on – how many times does a tax preparer have to be told not to knowingly report false or misleading information on a tax return or not to share or discuss the confidential personal financial information of clients with others without their approval.
In most cases the annual ethics CPE requirement is 2 hours (100 minutes) each year. But in reality tax preparers are forced to waste time and money on 4 to 6 hours of sermons each year, as CPE providers seem to feel that they must include 2 hours of ethics in almost every offering. I was told by a provider a few years back that if 2 hours of ethics were not offered attendance would drop.
For example, I recently signed up for NATP’s annual “The Essential 1040” year-end tax update seminar. I paid for 8 hours of education on new tax law, rules and regulations, inflation and COLA adjustments, and developments – but I will be cheated because I will only receive 6 hours of actual update CPE. Each year 2 hours of this seminar is devoted to redundant ethics preaching, during which I either “zone out” and daydream or read the newspaper. Like other “unenrolled” tax preparers, and those who choose not to participate in the AFSP, I have no requirement to sit through any ethics preaching.
NATP should remove the 2 hours of ethics preaching from “The Essential 1040”. The association’s annual National Conference (I went this year) and Tax Forums (I will attend next month) always include several good sessions on ethics issues (none of which I attended or will attend), each 100 minutes or 2 CPE hours. For those who do not attend the conference or Forum NATP could make available to the local chapters the course materials for these sessions and the individual chapters could offer a half day seminar on one or more of these offerings, or a combination of ethics and another tax topic.
Should “enrolled” preparers and AFSP participants be required to take any ethics CPE?. Perhaps 2 hours of ethics CPE in the first year of enrollment or participation, with maybe at most a 1 or 2 hour required ethics update every 3 or 4 years thereafter. CPE providers should, however, continue to offer ethics sessions as optional offerings at annual conferences and forums for those who feel the need to be reminded to remain honest.
I am very interested in hearing what my fellow tax professionals think about this.