Tax Law and News AICPA Expresses Concerns About Tax Return Preparer Legislation Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Alistair M. Nevius, J.D., Journal of Accountancy Modified Aug 5, 2019 3 min read Proposed legislation that would give the IRS broad authority to regulate paid tax return preparers is too broad, the AICPA said Tuesday in a letter to the Senate Finance Committee. The letter, from AICPA Tax Executive Committee Chair Troy Lewis to Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., commends the committee for its efforts to fight identity theft and tax fraud but expresses concerns the AICPA has with aspects of the bill. The as-yet unnumbered bill, introduced by Wyden and Sen. Ben Cardin, D-Md., is scheduled for markup by the Senate Finance Committee on Wednesday. [Update: On Wednesday, the committee postponed its planned markup and vote on the bill.] Most of the bill’s provisions are aimed at preventing identity theft and tax fraud, and include requiring the IRS to develop guidelines for identity theft refund cases, to report on identity theft refund fraud and to study the feasibility of blocking e-filed returns when a taxpayer has filed an identity theft affidavit. The bill would also increase the civil penalty under Sec. 7216 for unauthorized disclosure or use of taxpayer information by tax return preparers. The bill would also give the IRS authority to regulate all aspects of federal tax practice. Specifically, it would amend Title 31 of the U.S. Code to encompass all tax practice, regardless of whether it includes representation before the Treasury Department. In 2014, the IRS’s attempts to regulate paid tax return preparers through regulatory action were struck down by the D.C. Circuit because the IRS’s current authority to regulate practitioners, under 31 U.S.C. Section 330, only permits it “to regulate the practice of representatives of persons before the Department of the Treasury,” and the court held that tax return preparation is not representation before Treasury. In his letter, Lewis notes that the AICPA is a “steadfast supporter of the goals of enhancing compliance and elevating ethical conduct” but has “serious concerns and misgivings about granting the IRS unlimited authority to regulate tax return preparers.” Instead of a broad grant of authority, the AICPA recommends that Congress grant “specific authority necessary to address the concerns of incompetent and fraudulent, currently-unenrolled tax return preparers.” At a minimum, Lewis writes, Congress should limit the IRS’s authority to require a preparer tax identification number (PTIN) and require it to take steps to reduce confusion in the marketplace. The IRS should be limited to requiring PTINs only from (1) individuals who sign a tax return or claim for refund and (2) individuals who are involved in the preparation of tax returns or claims for refund but are not supervised by an attorney, CPA or enrolled preparer, the letter says. To reduce marketplace confusion, the AICPA recommends that currently unenrolled PTIN holders who represent themselves in advertising as PTIN holders, registered tax return preparers or any new type of IRS category of tax return preparer, include a statement explaining the differences between the types of preparers and “educating the public that the IRS does not endorse any particular tax return preparer.” The Joint Committee on Taxation has estimated that the bill would raise $286 million in revenue over 10 years, if enacted. Previous Post Health Insurance Mandate for Employers Next Post Businesses Frequently Overpay Sales and Use Taxes Written by Alistair M. Nevius, J.D., Journal of Accountancy Alistair M. Nevius is the Journal of Accountacy’s editor-in-chief, tax. More from Alistair M. Nevius, J.D., Journal of Accountancy Comments are closed. Browse Related Articles Tax Law and News TaxProTalk: AICPA on tax reform Tax Law and News Lightening the Compliance Burden Practice Management How to avoid a tax season meltdown Tax Law and News Why Tax Return Due Dates are Important Tax Law and News 2024 Tax Relief Act update for tax pros Practice Management Tips and Tricks for Tax Professionals Practice Management Don’t Go at it Alone This Off-Season Intuit® Accountants News Jon Munson, CPA/PFS, on Tax and Accounting Trends Practice Management 5 Online/Social Communities for Tax Professionals Tax Law and News ACA Interactive: Interview Guide for ProSeries® Profes…