Two of the largest tax professional associations joined two of the largest preparer companies to endorse legislation requiring practitioners to prove their competence to the IRS.
The Taxpayer Protection and Preparer Proficiency Act of 2021 (H.R. 4184), introduced in the House June 25, gained the support of four large tax professional organizations that announced August 17 that they would hold a press conference on August 24 to discuss how the legislation to require IRS preparer certification would improve the industry and protect taxpayers.
Jeffery S. Trinca, legislative counsel to the National Association of Enrolled Agents, said the ad hoc group’s support for H.R. 4184 is aimed at getting paid preparer regulation into an anticipated fiscal 2022 budget reconciliation bill later this summer, alongside IRS funding and other agency priorities.
“It’s critical, it’s been needed, and the timing is right,” Melanie Lauridsen, the American Institute of CPAs’ senior manager for tax policy and advocacy, told Tax Notes August 17 about the bill’s regulatory requirement.
“We just want to make sure people realize that when you strengthen the [tax] agency, setting sort of basic competency, the ability to remove [incompetent preparers] from the universe of those who can do tax preparation work,” along with other uniform, minimum, enforceable standards, will improve agency function while reassuring clients, Trinca said.
Lauridsen said the court decision in Loving v. IRS, No. 13-5061 (D.C. Cir. 2014), which found the tax agency and Treasury didn’t have statutory authority to enforce the IRS’s paid return preparer program regulations, also motivated AICPA’s support.
The participants in the August 24 event include AICPA, the NAEA, H&R Block, and Padgett Business Services.
‘Maintaining Standards’
H.R. 4184 would reinstate the registered tax return preparer program abandoned by the IRS after the Loving decision.
“Anybody who pays for their taxes to be prepared deserves to know that their tax preparers are professional, proficient, and principled, and, if not, will be held accountable by the IRS,” bill sponsor Rep. Jimmy Panetta, D-Calif., declared June 25 in announcing the bill, which is cosponsored by fellow House Ways and Means Committee member Tom Rice, R-S.C.
The bill would require preparers to complete a background check; pass a one-time, basic individual tax examination; and complete at least 15 hours of continuing education per year.
Sanctions could be levied under section 330(e) against a preparer who “misleads or threatens” a client.
There may be as many as a half-million tax return preparers currently operating without any oversight, Lauridsen said.
Trinca said that while the four organizations backing H.R. 4184 each maintain their own member certification and educational standards, “if you’re trying to maintain standards and your competition has no standards, that’s a hard thing.”
Lauridsen emphasized the diversity among the August 24 group, which includes CPAs and enrolled agents alongside private companies whose workforces and franchisees she said represent a broad swath of the tax professional market.
Trinca dismissed arguments that H.R. 4184 interferes with the free market. “Some folks live or die on regulation,” he said. The Panetta-Rice bill “is the bare minimum, from a preparer perspective,” he said.