Legislative / Regulatory | Legislative & Regulatory | Tax | Taxation

Congress takes another stab at regulating tax preparers

Remember tax preparer regulation? It’s ba-a-a-a-a-a-ck.

Sen. Rob Portman (R-OH) has introduced a new bill, the Protecting Taxpayers Act, which would “amend the Internal Revenue Code of 1986 to provide additional protections to taxpayers." Here's how Forbes reporter Kelly Phillips Erb describes it:

“In 2013, attorney Dan Alban of the Institute for Justice argued that the IRS could not license tax preparers for one simple reason: Congress never gave the IRS the authority to license tax preparers, and the IRS can’t give itself that power. The courts agreed. However, Sen. Rob Portman (R-OH) aims to change that with a new bill, the Protecting Taxpayers Act (S. 3278).

"The bill is intended to 'amend the Internal Revenue Code of 1986 to provide additional protections to taxpayers.' The full text of the bill is not available yet, but those protections, according to Portman, would include the right of the IRS to 'regulate paid tax return preparers in a balanced way.'”

There were some failed attempts in 2015, as Phillips Erb puts it, "to give the IRS the authority for mandatory oversight of return preparers."

Now, Congress is trying again, and it has the support of the American Institute of CPAs. Here's what the AICPA says about Sen. Portman's proposal:

"In a letter to the bi-partisan bill’s sponsors, Sens. Rob Portman and Ben Cardin, the AICPA stated, 'On behalf of our members, the AICPA would like to express its support for Section 202, Regulation of Tax Return Preparers, which will help to promote good tax administration and protect the interests of the American taxpayer by protecting taxpayers from incompetent and unscrupulous preparers.'

"The AICPA wrote that S. 3278, by authorizing the IRS to sanction tax return preparers and revoke preparer tax identification numbers (PTIN), would allow the agency to 'act swiftly and efficiently to stop preparers from continuing to file inaccurate and fraudulent tax returns.'

"Importantly, the AICPA noted, the rights of tax advisers are protected by the bill. For example, prior to a preparer’s PTIN number being rescinded, the preparer would receive a notice and have the right to a hearing.

“'S. 3278 also provides appropriate exceptions from the (bill’s) competency provisions for attorneys, (CPAs), enrolled agents and individuals supervised by these professionals,' the AICPA wrote. 'We appreciate that you recognize the inherent regulatory regime within which CPAs and other legacy Circular 230 practitioners already practice, as well as the fact that CPA firms must stand, as a matter of licensure, behind the work done by the members and employees of their firms.'

"The AICPA commended Sens. Portman and Cardin for introducing S. 3278. 'We appreciate your efforts to ensure a service-oriented, modernized tax administration system that earns the respect and appreciation of both taxpayers and their advisers.'”

Where this proposal will go is anyone's guess, but if you want to learn more, follow Phillips Erb's updates on Forbes ... and of course, we'll keep you updated here as well.

Want to learn more? Don't miss the MACPA's 2018 Chesapeake Tax Conference, scheduled for Sept. 24-25 at Martin's West in Baltimore. The agenda will feature federal tax updates, tax considerations for short-term rentals, Schedule C issues, tax errors in employee compensation and benefits, Tax Court issues, and a whole lot more. Get more details and register here.


Bill Sheridan