Tax Preparers Speak Out Against New Regs, File Suit Against IRS

[powerage]

I just found this. http://www.forbes.com/sites/kellyphi...t-against-irs/

Pretty interesting, but I don't have a problem with the requirements.

[taxea]

All I can say it "Those who can do, those who can't complain" and "if you have nothing to hide you hide nothing"
I think these three have no confidence in their ability to prepare taxes. These regulations are good for all in the business and are meant to weed-out the bad preparers, if nothing else. I welcome the regulations and think they were a longtime coming.

[erchess]

Regulations

The biggest part of the regulations I appreciate is that as I understand it I as an EA (likw CPA or Attorney) stood to pay a steeper penalty for a given wrongdoing than an unenrolled preparer but now an RTRP who does as I do will reap what I reap. To me that's only fair because the former regulations allowed the unenrolled to get by with things that made clients happy (at least until the Notice came) that I could not. Taxpayers not unreasonably tended to decide the other guys knew more than I did. However it does seem to me that this could have been done without testing and continuing education requirements and a new designation. On the other hand I don't think those are bad ideas at all.

[ChEAr$]

The biggest part of the regulations I appreciate is that as I understand it I as an EA (likw CPA or Attorney) stood to pay a steeper penalty for a given wrongdoing than an unenrolled preparer but now an RTRP who does as I do will reap what I reap. To me that's only fair because the former regulations allowed the unenrolled to get by with things that made clients happy (at least until the Notice came) that I could not. Taxpayers not unreasonably tended to decide the other guys knew more than I did. However it does seem to me that this could have been done without testing and continuing education requirements and a new designation. On the other hand I don't think those are bad ideas at all.

Ah, but Ed, I would have expected you maybe to side with plaintiffs, IF ,,, that is IF, the IRS indeed has no authority to promulgate said regulations. The plaintiffs aver that IRS has not been granted the right to regulate by congress.

What about that? (grin)

(see you in Asheville in May.)

[erchess]

Harlan

If the courts hold merely that no existing provision of law allows the regulations a relevant law could be passed and at worst progress would only be slowed. What would concern me more would be if the courts should hold that the regulations violate the Constitution. Only a Constitutional Amendment would fix that and at the very least the process would be time consuming.

[joanmcq]

Yes, I loved the Circular 230 complaint about 'excessive regulations' they now had to follow. Levels the field a bit!

[ChEAr$]

If the courts hold merely that no existing provision of law allows the regulations a relevant law could be passed and at worst progress would only be slowed. What would concern me more would be if the courts should hold that the regulations violate the Constitution. Only a Constitutional Amendment would fix that and at the very least the process would be time consuming.

Should courts finally rule IRS regulations non enforceable, it would then be up to congress to pass a law which would allow U S TReasury to prescribe necessary laws. it don't take a constitutional amendment to do everything.

[powerage]

My boss, an EA, said a barber or a hairstylist needs a license, so why not a paid tax preparer? I agree.

The one thing I disagree with is they mentioned the cost of $1,000 for continuing education credits. BS, I've seen them for much cheaper, or free, as in my case.

[Lion]

Exactly, IRS Teleforums are free and need just a telephone, so even that 80-year-old plaintiff without a computer can get free credits. Not to mention, that since he does not use tax prep software, he is NOT required to e-file, so does not have to purchase $1,000s of equipment.

[Koss]

Forbes Blog

The article contained a couple of serious factual flaws. The comment about the cost of continuing education was one of them.

I still think the package bundles at apluscpe.com are the greatest deal around. EAs and RTRPs can get all the required CPE for only 69.95.

What I found even more annoying was the assertion on page 2 of the article that "[a]ttorneys, CPAs and enrolled agents (EAs) are exempt from the competency testing and continuing education requirements."

Excuse me?

Enrolled agents are not exempt from the testing or from the education requirements. Most on this board already know this, but EAs have already passed a tougher test, and they are required to take more CPE than an RTRP.

What is disappointing is that the author of this blog on Forbes is a well-known tax attorney. I would have expected her to know something about the requirements that are applicable to enrolled agents, or do her homework before publishing this thing.

With that being said, the author actually seems to support the new regulations. She just didn't do a very good job of reporting the factual background of the case.

The rhetoric and tone of the article actually make it sound like there's thousands of lawyers and CPAs out there who are doing tax returns who are not qualified, and that the IRS is ignoring this issue while trying to regulate other preparers.

It's ridiculous. Most tax lawyers don't do that many tax returns; they do more complicated stuff that involves representation before the IRS or the courts, and they do tax and estate planning.

It is absolutely true that just being a CPA doesn't make you qualified to do tax returns. But the CPAs who aren't qualified to do taxes aren't doing them.

BMK

[veritas]

On the other hand

My boss, an EA, said a barber or a hairstylist needs a license, so why not a paid tax preparer? I agree.

The one thing I disagree with is they mentioned the cost of $1,000 for continuing education credits. BS, I've seen them for much cheaper, or free, as in my case.

why does a barber or hairstylist need a license?

[Koss]

Licensing

Veritas wrote:

why does a barber or hairstylist need a license?

This is what the lawsuit is really all about. Barbers, insurance agents, real estate agents, taxi drivers... and CPAs and attorneys. Most licensing is done by the states.

And whether you agree with it or not, each state has actually passed a law that requires a person engaged in these activities to have a license. Maybe it's just a bad law. But the state legislature enacted a law that says you can't be a barber, or a dentist, without a license.

The core claim of the lawsuit is that there is no federal law that requires a tax preparer to have a license, and that the IRS has exceeded the scope of its authority by imposing the regulations.

There might be something to it.

Is there any other professional service that is licensed in this manner by a federal agency?

What would happen if the US Department of Health announced a similar scheme for regulating and licensing housekeepers and janitors?

Okay, I know that's not the same. But there is a valid question here. The IRS may not have statutory authority to establish these regulations and requirements. If that is the case, the courts will strike it down, and Congress would have to get involved in order to preserve it.

BMK

[taxea]

I urge all who agree that all preparers, including those at the big box companies, be regulated by the IRS to write and express your views to Doug Shulman and the OPR.a

[AZ-Tax]

I said it before and say it again

.However it does seem to me that this could have been done without testing and continuing education requirements and a new designation. On the other hand I don't think those are bad ideas at all.

I strongly feel the IRS should have strongly considered a separate designation using the passage of Part 1 (individual) and Part 3 (rules and regs) of the EA exam vs. a complete new exam to prepare all related 1040 forms and schedules. As for CE, I am ok with that for it just adds to all the other CE's I take (securities & insurance) but that is water under the bridge now I beleive the IRS should give w/o examination, all EA's the additional tilte of RTRP.

[Bees Knees]

IRS does have the authority under the law to regulate

Regardless of everyone’s opinion on why the IRS should regulate tax return preparers, the issue in the lawsuit is really about whether the IRS has the authority to regulate tax return preparers.

Here is where I think the lawsuit does not have a leg to stand on. Under the law, as passed by Congress and signed by the President, Internal Revenue Code Section 6109(a) says:

When required by regulations prescribed by the Secretary…(4) Any return or claim for refund prepared by a tax return preparer shall bear such identifying number for securing proper identification of such preparer, his employer, or both, as may be prescribed…

Paragraphs 1, 2, and 3 in that code section (which applies to the taxpayer) says the Social Security Number can be the identify number, but paragraph 4 (which applies to the preparer) does not.

Thus, the very code section that requires tax return preparers to furnish identifying numbers on the return specifically allows IRS to regulate the kind of number that has to be furnished. A tax return preparer cannot use his/her Social Security number to satisfy IRC §6109(a)(4) because the code specifically says IRS has the authority to decide what type of number can be used to satisfy that requirement.

This code section is the key that allows IRS to regulate and require PTIN registration, and the requirements on HOW to obtain a valid PTIN.