Tax preparers revolt over IRS regulations

The American Institute of Certified Public Accountants is urging the leaders of the House Ways and Means Committee to oppose legislation giving the Internal Revenue Service broad authority to regulate tax return preparers.

The group is looking to beat back the Tax Return Preparer Competency Act, which was introduced last week by Reps. Diane Black (R-Tenn.) and Patrick Meehan (R-Pa.). The legislation would require professional tax return preparers to submit to background checks and take examinations and continuing-education classes.

“We believe the Tax Return Preparer Competency Act allows the IRS to over-regulate professional, credentialed tax return preparers and their staff without providing adequate value to taxpayers or additional protection to the public,” the AICPA said in the letter sent Friday to Ways and Means Committee Chairman Kevin Brady (R-Texas) and ranking member Sandy Levin (D-Mich.).

Many in Congress have been interested in legislation authorizing the regulation of paid return preparers since a federal appeals court ruled in 2014 that the IRS overreached in its regulation of them. But the AICPA has expressed concerns about measures to do so.

Some Republicans have also expressed concerns about giving the IRS more authority in the wake of the agency’s targeting of Tea Party groups. In September, Senate Finance Committee Chairman Orrin Hatch (R-Utah) decided at the last minute not to move forward with the committee’s consideration of a measure that would give the IRS more power to regulate preparers.

While the bill from Black and Meehan intends to address “fly-by-the-night tax preparers,” the legislation would require all preparers to satisfy continuing education requirements. The group said that CPAs and lawyers are already highly regulated and subject to testing and education requirements and should not be subject to duplicate requirements.

“We also strongly urge you to specifically exempt in the statute credentialed preparers and their non-signing staff from the examination and background checks as opposed to granting the Secretary discretion,” the AICPA said.

Instead of enacting rules that apply to credentialed tax return preparers, the AICPA said that Congress should mandate that the IRS enact a testing and education program that applies exclusively to prepares that are not licensed by the states. 

The group also had some recommendations concerning preparer tax identification numbers (PTINs). It urged Congress to allow the IRS to revoke a PTIN for failure to comply with regulations. It said that legislation should address the requirement that non-signers of tax returns obtain preparer tax identification numbers, which is “burdensome.” And it said Congress should require unlicensed PTIN holders using paid advertising to make certain disclosures in the ads.