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.
TAFN
Let's see. All the questions on ethics tests boil down to "Should I lie?" If you're an honest bloke, the answer is obvious. If you're a cheating scoundrel, the answer is STILL obvious. Both groups say No although only one of the groups mean it. Thus, mandatory ethics classes are a waste of everyone's time.
ReplyDeleteRobert:
ReplyDeleteFirst I disagree a it on WHY we have ethics requirements. I think they exist more as a way to prevent an unethical tax professional, when being prosecuted, from having the defense of "I didn't know any better".
I agree ethics should NOT be part of most CE programs. In addition to your statements, for the 'enrolled' who must have 72 CE each three years (including 2 CE per year), we cannot use excess CE. If we take more than 2 CE of ethics in a year, the excess CANNOT be counted as 'federal courses'. Rather the credits are lost. I am a frequent speaker for the IRS at annual tax updates, and they allow me 50 minutes for ethics. I have explained until I am blue in the face that since most ethics programs are 2 CE (to meet the requirements), a 1 CE class is a true waste for all.
I would rather see a triennial requirement. I also think ethics should be presented as case study and not lecture, allowing the professional to truly think about 'real world' applications of ethics.
[Disclosure: In addition to being a paid continuing education speaker, I also own a small for-profit continuing education provider which is licensed with the IRS and CTEC]