The Internal Revenue Service’s proposed voluntary certification program for tax return preparers “would cause significant legal problems that may ultimately frustrate the IRS’s goals, confuse the public, and lead to litigation,” according to the American Institute of CPAs (AICPA).
The program is the IRS' attempt to impose some form of licensing and follows the agency's previous attempt at mandatory certification, which was overturned by a federal judge last year.
In a letter to IRS Commissioner John Koskinen, AICPA Chairman of the Board of Directors William E. (Bill) Balhoff, CPA, CGMA, CFF and President and CEO Barry C. Melancon, CPA, CGMA wrote, “We have repeatedly expressed to you and your colleagues that our members have very significant concerns regarding a voluntary certification program and urged the IRS to have a formal comment period to obtain and consider the public’s views prior to moving forward. … However, it is our understanding that the IRS has no intention of slowing down or considering viable alternatives. Therefore, we feel compelled to consider our next steps, and to raise more formally our legal and policy concerns with the IRS’s current path.” Under the proposed voluntary program, tax return preparers would receive an IRS certificate for display in return for completing a continuing education program that includes a comprehension assessment.
The AICPA’s letter emphasizes the following points:
- First, no statute authorizes the proposed program;
- Second, the program will inevitably be viewed as an end-run around Loving v. IRS, (a federal court ruling rejecting an earlier IRS attempt to regulate tax return preparers);
- Third, the IRS has evidently concluded, in developing the proposed program, that it need not comply with the notice and comment requirements of the Administrative Procedure Act. This is incorrect; and
- Finally, the current proposal is arbitrary and capricious because it fails to address the problems presented by unethical tax return preparers, runs counter to evidence presented to the IRS, and will create market confusion.
Describing the proposed program as “unlawful and improper,” the June 24 letter stated that it is essential that any regulatory approach instituted by the IRS to address this issue has a firm legal basis and reflects sound policy. “We continue to believe that additional regulation of tax return preparers might yield significant benefits and that the IRS can achieve these objectives while remaining consistent with Loving and other statutory limitations on the IRS’s authority,” the letter stated.
“We have sought to work with the IRS to achieve workable solutions to regulate tax return preparers and protect the public, and we stand ready to continue these efforts,” the AICPA wrote.