Discussion:New paid tax preparer regulations-update

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Discussion Forum Index --> Basic Tax Questions --> New paid tax preparer regulations-update


Discussion Forum Index --> Tax Questions --> New paid tax preparer regulations-update

Taxea (talk|edits) said:

24 February 2010
Regarding the discussion a couple of weeks ago about whether or not employees of the big box tax prep services would be subject to the new regulations....I sent an email to the person at NATP who is liaison with the IRS. This is his response to my question...I am happy to say that his opinion is...yes! they will.,.......yea!!!!!


Hello Laura –

    The Return Preparer Review Report states that only those preparers who are compensated for preparing returns and who are required to sign returns are required to obtain a PTIN and undergo this regulation, to include testing and continuing education.  Therefore, I suppose it is possible/likely that “intake” persons at a franchise and data entry people may not be subject to these rules.  Circular 230 as well as Code section 6694 and its regulations address “who is considered a tax return preparer.”  I don’t know whether the IRS will adopt the same rules for these purposes or not.  It would seem logical that they would.
    A great deal of discussion has been held on this issue…so much so that the Report also states: “Although the IRS initially will require only signing tax return preparers to register, it will consider extending the registration requirement to all tax return preparers, and in particular to non-signing tax return preparers who are not attorneys, CPAs, enrolled agents, or otherwise licensed as tax professionals.”  
    So the answer to your question is that not every preparer employee of franchises will be subject to these regulations initially.  I know that’s not what you were looking for as an answer Laura, but that’s where things stand at present.  

Paul

Paul C. Cinquemani, MBA, CPA National Association of Tax Professionals (NATP) P.O. Box 8002 Appleton, Wisconsin 54912-8002 920.749.1040 920.968.7417 fax pcinquemani@natptax.com

Vetteman901 (talk|edits) said:

19 January 2013
News Flash. Salon.com just reported the Federal Court ruled against the IRS, they struck down the new regulations for preparers.

NYea (talk|edits) said:

19 January 2013
https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2012cv0385-22

Ckenefick (talk|edits) said:

19 January 2013
Not all that surprising. The real question is: Will Congress put these rules back on the books? What say you?

Also, does it mean we will get refunds of our PTIN renewal fees?

Doug M (talk|edits) said:

19 January 2013
Agree with Chris. We will be regulated, it is just a matter of who.

AgwmTax (talk|edits) said:

19 January 2013
I think the fight between Democrats and Repubs will spill into this issue also. What are the chances the tea party and libertarian reps will allow a vote on this in HR this year. There are bigger fish to fry for them especially with the budget, debt and fiscal issues.

Guya (talk|edits) said:

19 January 2013
According to this report:

http://www.accountingtoday.com/news/IRS-Loses-Lawsuit-Challenging-Authority-Regulate-Tax-Preparers-65408-1.html?ET=webcpa:e6597:410191a:&st=email 1. The PTIN fees and the $50 or $60 million the government earns from these each year are legal. 2. Both the RRTP & mandatory education are not within the law.

I am - personally - 100% in favour of mandatory regulation of all preparers to reduce bad preparers and theft and to preserve the reputation of all tax professionals.

I just do not happen to think the regulation should be done by the government agency that collects taxes.

Death&Taxes (talk|edits) said:

19 January 2013
Good news for this guy:

http://wtvr.com/2012/11/27/man-behind-mo-money-taxes-is-back-with-new-name/

JR1 (talk|edits) said:

January 19, 2013
Yeah, I don't know that I'm opposed to better regulation in order to get the crap folks out, IF that actually occurs. The trouble is that much like any kind of regulation/registration done by the government, it usually does NOT do what it was intended, and spins off any number of unintended consequences.

Mikec61 (talk|edits) said:

19 January 2013
"Where's my Refund"!!!!! PTIN #, Cost of taking the RTRP exam plus the requirement to take a mandatory 15 hour and the cost of study material necessary to assure a passing grade????????

Fsteincpa (talk|edits) said:

19 January 2013
Did you read the name of the one accountant in the Accounting Today article? John Gambino, from Hoboken, NJ.

No wonder the IRS lost, there was an offer that could not be refused.

Death&Taxes (talk|edits) said:

19 January 2013
"Plaintiff Sabina Loving owns Loving Tax Services, Inc., in the South Side of Chicago. Prior to starting Loving Tax Services, Loving worked an accountant. She’s been preparing taxes professionally for the past three years and expects to prepare approximately 100 tax returns this year.

"Plaintiff Elmer Kilian is a retired Korean War veteran living in Eagle, Wisconsin, where he owns and operates Eagle Tax Services. He has been preparing taxes part-time and seasonally for about 30 years. He prepares about 80 to 100 paid tax returns per year.

"Plaintiff John Gambino is a Certified Financial Planner (CFP) and registered investment advisor in Hoboken, N.J. Gambino has offered tax return prep services for his clients since 2004. He prepares approximately 50 paid tax returns per year."

This from Forbes

Kevinh5 (talk|edits) said:

19 January 2013
I'm wondering whether the IRS could make the RTRP an optional designation. Those who WANT to pass the test and be subject to Circular 230. And be listed as an RTRP on the IRS' website.

CathysTaxes (talk|edits) said:

19 January 2013
Personally, the only issue I had with the RTRP was the way the testing was done. I believe that the test should have been Part 1 of the SEE with a mandatory 2 hour ethic requirement (this would simplify and speed up the process to become an EA).

The registration fee, I thought was bogus (especially since they were requiring the EAs and CPAs to do it), but I think the education requirement is a good idea.

JAD (talk|edits) said:

19 January 2013
My beef was with the IRS as the regulator, as Guya said. We, as professionals, sit with our clients across the table from the IRS. The IRS as our regulator, therefore above us, creates a conflict at the table.

HowardS (talk|edits) said:

19 January 2013
I'm proud of my RTRP designation (I believe it stands for "Relegated To Rear Position). It just does absolutely nothing to eliminate dishonest or incompetent preparers.

JR1 (talk|edits) said:

January 20, 2013
Indeed. Now we wait to see how or if Congress responds. Thankfully, we have rather divided gov't right now, which is likely to our advantage. Expanding gov't powers isn't something the House is up for. Of course, there could always be an Executive Order in his opinion.

CrowJD (talk|edits) said:

20 January 2013
This is not a Supreme Court case, or even a Court of Appeals case, it's a District Court for crying out loud. Who is subject to the ruling of the case? What jurisdictional coverage does this court have? I would guess it will be appealed anyway (not if but when),

Ckenefick (talk|edits) said:

20 January 2013
Nobody disputed the facts. Both sides agreed to them, so they both sought summary judgment.

JAD (talk|edits) said:

20 January 2013
I enjoyed seeing the IRS lose, but this case didn't do anything for me. There is no change to the regulation of CPAs etc. Also, I have to wonder about the three preparers who brought the case. One said that she will have to raise her prices, and two said that they will close their businesses. We're talking about a $64 fee and the cost of 15 hrs of CPE? This implies that they can't spread a $64 cost among their clients and that they are not already doing at least 15 hrs of CPE. It is astounding to me that someone would be in this business and not be completing well over 15 hrs per year of CPE regardless of any requirement.

Uncle Sam (talk|edits) said:

20 January 2013
JAD - you couldn't be more wrong if you tried.

You enjoyed seeing the IRS lose? The attempt in this country is to have IRS have some control over the non CPAs, EAs, and Attorneys, who prepare returns under substandard conditions, and might be incompetent besides. This in turn provides imperfect competition for licensed practitioners who have the administrative burdens of license fees, education fees, liability insurance premiums, all of which increase your fee - where they can dupe the public with lower fees giving them the impression they're getting the same (quality) service for less.

STG (talk|edits) said:

20 January 2013
My only issue with this (beside my Libertarian bent against barriers to profession entry) is that it does nothing to solve the REAL producer of inaccurate returns - bad software used by taxpayers who don't understand what they're doing.

JAD (talk|edits) said:

20 January 2013
Uncle Sam, as I said above, I think that the IRS is not the agency that should be doing the regulation. Yes, I'm glad the IRS lost. The preparer regulation is not the only thing that the IRS does that I don't like - and I enjoy it when someone or some force puts limitations on the agency. And I'm allowed my opinion, regardless of whether you think it is wrong. 3 + 1 = 6 is wrong. My opinion is what it is, and you may disagree with it, but that doesn't make my opinion wrong.

Uncle Sam (talk|edits) said:

20 January 2013
You seem to have the problem twisted STG - those public who use their own commercial software

package and don't know how to use it, let alone not being conversant with tax law create only problems for themselves. IRS takes care of that with audits of returns with exceptionally high error rates.

It's the unlicensed and unregulated preparers who claim they're competent without any sort of government control who due to not having the overhead of compliance costs that mislead the public and create havoc for the rest of us who do possess the technical training and knowledge.

Very often, when a new client comes to me from a franchise shop or other totally unlicensed preparer, amended returns need to be prepared to correct mistakes - costing the taxpayer more money than expected because of the "cheaper priced" preparer.

EAinVA (talk|edits) said:

20 January 2013
Unfortunately, both sides of this issue are partially correct.

It can only get worse once Congress becomes involved. Who is willing to front the money to influence the outcome?

MIG999 (talk|edits) said:

21 January 2013
From a customer standpoint it does not much matter to our firm. We do very few what I would call "EITC type returns", which are the bread and butter of many of the one-person shops. We will still get the people whose complicated returns are messed up by these folks with the resultant IRS notice etc. etc. I do think some weeding out does need to occur. Some of the returns we see from prior years are a bit scary for the preparers lack of knowledge.

Who wants to take over the task of overseeing tax preparation? It may be that more states will step in.

Mark g.

STG (talk|edits) said:

21 January 2013
Uncle Sam, I understand that my position is somewhat twisted, but it is a concern that the IRS seems not to care that either a) the tax system is too complicated for people to use software to get an accurate result, or b) The software is inadequate to ensure that the average taxpayer gets an accurate result.

Taxpayers still pay to get an accurate result with software, the majority of taxpayers use software, and the majority of software users with complex tax returns get crap results.

But the IRS doesn't care.

Agree with everything else you say about paid preparers.

Ckenefick (talk|edits) said:

21 January 2013
Isn't it somewhat to be expected that we have EIC fraud when the EIC is part of a tax return (which makes it fall under the administrative purview of the IRS)? Why don't they just set up an EIC Agency to handle it?

EatonCPA (talk|edits) said:

21 January 2013
"Isn't it somewhat to be expected that we have EIC fraud when the EIC is part of a tax return (which makes it fall under the administrative purview of the IRS)? Why don't they just set up an EIC Agency to handle it? "

Administrative overhead. The more agencies you have, the more it costs the taxpayers for the same (or worse) functionality.

Z32 Twin Turbo (talk|edits) said:

21 January 2013
The court issue is about, HOW, the IRS went about imposing the new prep regualtions. Not the regulations themselves. Research the law they they used to "justify" it. I would side with the court too !!!! Do it the right way and there is no issue !!!!! Checks and Balances People !!!!!

Ckenefick (talk|edits) said:

21 January 2013
Not really, court said Treasury exceeded its authority by issuing the regs.

Z32 Twin Turbo (talk|edits) said:

21 January 2013
Yes !! They exceeded thier authority by relying on its iterpretation of an old law !! Like I said its "How" they went about it. Should have went the proper channels and "Hidden" it in a "Fair Trade Act" or some other non-related bill and let Congress put it through.  :) Like they usually do.

JR1 (talk|edits) said:

January 21, 2013
Lead attorney says that there may not be much happening now. IRS has to have authorization to appeal from Solicitor General, who seems unlikely to agree to it considering the strength of the opinion. And Congress has had 8 bills in 10 years to give IRS this authority, and has not done so. And of course, their plate is full...so we may be left with mere registration and paying.

Ckenefick (talk|edits) said:

21 January 2013
Ok Z-32, now you're talking semantics. When it comes to Regulations, all the IRS can do is issue them when given the authority to do so by Congress.

Should have went the proper channels and "Hidden" it in a "Fair Trade Act" or some other non-related bill and let Congress put it through.

Therein lies the problem for the IRS. In order to include it in legislation, Congress would of course become aware of it. And Congress may very well have had a problem with it. But then again, Congress might not have had a problem with it. Not sure if IRS was scared to ask fearing what Congress might say or, just decided unilaterally to railroad through the regulations, not caring what Congress might or might not think about it.

At this point, however, we'll find out what Congress thinks about all this. If Congress thinks the rules are worthwhile, they'll pass legislation.

JR1 (talk|edits) said:

January 21, 2013
See my comment posting as Chris posted. From 'an' attorney on the case.

Ckenefick (talk|edits) said:

21 January 2013
You see, the IRS has nothing to lose here. Let's start here: We have a problem with preparers. Let's call this the "as is" system. IRS issues regulations with the noble aim of cleaning things up. We now have a "new" system. But, regs are deemed invalid. So, "new" system simply reverts back to the "as is" or old system. We are back where we started. The IRS has not lost anything. That is, IRS doesn't have to pay a penalty for violating the law, doesn't have to make restitution, doesn't even have to apologize, etc. In essence, no accountability. Go figure.

CrowJD (talk|edits) said:

21 January 2013
Whether the IRS is granted authority to appeal or not, this is just a trial court decision on a motion for summary judgment. I don't see how this ruling on a motion would affect the IRS nationwide, that's for sure. Perhaps a lawyer with more federal experience than I have will give an opinion on it, or one of the lawyers for a preparer organization. Maybe they already have.

Of course, the IRS commissioner could always decide to be bound by it but that would be very unlike a federal agency at this early phase in the litigation. Has the IRS announced that it is suspending enforcement of the applicable Regs.? I don't know.

Ckenefick (talk|edits) said:

21 January 2013
Maybe we'll someone else to sue...what are you guys doing tonight?

JR1 (talk|edits) said:

January 21, 2013
I think that since this 'just a trial court' happens to be the district court in DC must have a tad more bearing than one in say, Pensacola. And while I'm still trying to get around to reading the decision, it sounds as though it was a slam dunk and I know that when the suit was being filed, it felt like it would be a slam dunk from the get go. The attorneys were nearly 100% certain of victory. (And you'd have to be, to sue the IRS like this!) So I wouldn't set it aside as some mere minor commentary from a place that doesn't matter.

JAD (talk|edits) said:

21 January 2013
It's an easy read, and almost humorous in parts. And you are correct, it was a slam dunk. The court didn't give the IRS anything.

Z32 Twin Turbo (talk|edits) said:

21 January 2013
Ckenefick wrote : Maybe we'll someone else to sue...what are you guys doing tonight?

Im going to go shoot my AR15 !!! Wanna go !!!

JR1 (talk|edits) said:

January 21, 2013
Slam dunk indeed. In fact, a poster shot. The judge very carefully and accurately reviewed both the history and the underlying regulations which are what truly define 'practice'. There's no wiggle room here. Of course, decision was rendered late Fri., today was Martin Luther King day, so it will be interesting to see IRS' response. Guessing something along the lines of "Balderdash! We're appealiing. (As soon as we can get permission from someone.)"

Wiles (talk|edits) said:

22 January 2013
The IRS has the authority to enforce the taxation system. We don't need new laws, just enforce the existing laws. Maybe this slap on the hand will wake the sleeping giant and cause them to do what they are supposed to do. The IRS already has plenty of ways to deal with the ill-educated, incompetent tax preparer, and they are all a lot worse than making them past a test. Find a hundred of these guys or gals and audit half of their clients. That should get things started.

Besides, we all know that the truly unscrupulous will just complete the tax return as self-prepared anyhow.

Death&Taxes (talk|edits) said:

22 January 2013
"The IRS has the authority to enforce the taxation system." Be funny if a large percentage of Ms. Loving's clients were audited.

Skassel (talk|edits) said:

22 January 2013
Sorry, Wiles, but your statement is erroneous. Congress did not give the IRS the authority to regulate tax preparers. Reading the Court's opinion AND reading IRS statements over the past several decades makes that very clear.

Ckenefick (talk|edits) said:

22 January 2013
I don't think Wiles choose her words too carefully. I think she meant to say "Internal Revenue Code" and not "taxation system."

From Sec 7801:

(a) Powers and duties of Secretary. (1) In general. Except as otherwise expressly provided by law, the administration and enforcement of this title shall be performed by or under the supervision of the Secretary of the Treasury

JR1 (talk|edits) said:

January 22, 2013
And David, not funny at all! I was supposed to be part of the suit and in the end took a pass, not only for that, but also personal reasons. (Today would be my son's 21st birthday. Sadly, he's not here for it....) Part of the assurance of the legal foundation was that no way Jose would IRS have the courage to go after the plaintiffs, it would not go well with them. But there are ways, aren't there...? So to protect my clients...

Death&Taxes (talk|edits) said:

22 January 2013
IRS response: http://www.irs.gov/uac/IRS-Statement-on-Court-Ruling-Related-to-Return-Preparers

Someone must have taken lessons from Bill Belichick.

JR1 (talk|edits) said:

January 22, 2013
Wow. Stunningly short!!

Fsteincpa (talk|edits) said:

23 January 2013
I hate BB

Vetteman901 (talk|edits) said:

23 January 2013
The gov't, know matter who tries to regulate this, will have it all screwed up. Neither Congress or the IRS are qualified to run apple bobbing contest at a ten year olds birthday party. Ranting partially completed. So did Congress authorize the IRS to insert the BS due diligence penalties? I'm tired of being an auditor and private investigator. I don't mind a little probing into an EITC return, but I am not running down their family tree. There isn't a document anywhere that will protect a preparer or employer from penalties. I have always used the so called knowledge requirements in the past before the IRS dreamed up Form 8867, and refused a fraudulent return, but now I have to document every return? What a crock!

Ricky (talk|edits) said:

24 January 2013
I agree with Vetteman901 above. The IRS tends to shoot first and ask questions later. The IRS can basically do anything they wish to do, and I have no interest in giving them more power.

Wasn't just a year ago they were sending CPAs and other practitioners letters (Letter 4809) informing us that they knew we were doing something wrong, without ever bothering to audit a tax return.

We are now part of the IRS' audit team, as we must vouch as to whether business clients have filed all necessary 1099-MISCs.

They will always over-regulate those who are doing things correctly, working very long hours, and sweating over the details, preparing and checking returns.

Meanwhile, prisoners and criminal non-preparers are somehow filing numerous fraudulent returns, with EITCs, child tax credits, etc, and cannot be caught.

Ckenefick (talk|edits) said:

24 January 2013
Wasn't just a year ago they were sending CPAs and other practitioners letters (Letter 4809) informing us that they knew we were doing something wrong, without ever bothering to audit a tax return.

IRS: "You know what you've been doing wrong..."

Tax Preparer: "No, what. Seriously. What is it?"

IRS: "You know."

Tax Preparer: "No, I don't. Please tell me. What have we been doing wrong?"

IRS: "You know. You know what I'm talking about. Enough of this. We will pass more regulations."

Tax Preparer: "Uuumm. Okay. Whatever. But I still don't know what we've been doing wrong."

Ricky (talk|edits) said:

24 January 2013
I'm laughing now, Ckenefick, but I can promise you I wasn't a year ago!!!

Yes, the presumption was that we were cheating. "And just stop doing it! And stop it right now!"

NMexEA (talk|edits) said:

24 January 2013
I posted a link to the opinion elsewhere but here it is:

https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2012cv0385-22

Well worth reading, too.

Ckenefick (talk|edits) said:

24 January 2013
My dialogue is pretty much how the Subchapter K anti-abuse regs came about. Yeah, I suppose there were a few abusers out there. But instead of using a targeted fly-swatter, as was done with the disguised sale rules, they used a sledge-hammer.

Taxea (talk|edits) said:

24 January 2013
In response the IRS has shutdown all testing and the RTPR office.

I still want to see something in writing that says we do not have to renew the PTIN status.

Ricky (talk|edits) said:

24 January 2013
I don't believe the court ruled against the IRS' use of PTINs to practitioners. PTIN's were originally used so that a preparer did not have to use his SSN on the return.

The problem came in, however, when the PTIN became the practitioner's "ankle bracelet" for the IRS' database in order to follow your every move.

The new RPO office, formerly run by David R. Williams, along with former Commissioner Shulman, is where these powers were "created," so to speak........

Death&Taxes (talk|edits) said:

24 January 2013
http://www.forbes.com/sites/janetnovack/2013/01/24/irs-asks-judge-to-suspend-injunction-barring-regulation-of-tax-preparers/

Ckenefick (talk|edits) said:

24 January 2013
The saga continues...Last time I checked, we have a rule of law in the country and an established way of setting them. Perhaps if the IRS had followed these rules, we wouldn't be having this debate - and wouldn't be incurring costs out the whazoo to support or defend our views on the matter. I don't think anyone is really arguing with the underlying theory...

Death&Taxes (talk|edits) said:

24 January 2013
"I don't think anyone is really arguing with the underlying theory..." I wish I could agree, but I think there are a number of people who want to continue as was......like one I saw who prepared flight attendant returns where so many of his clients ended up audited....I suppose the returns fit a pattern and were easy to find (years were 2003-06) but there are so many others like that and who were never found out.

My stepsons tell me about this guy who prepares a lot of union electricians and takes what sound like liberties with the commuting/temporary assignment rules so that "these guys get huge refunds."

NMexEA (talk|edits) said:

24 January 2013
In defense of the IRS, the thrust of the Court's opinion is that there is no way the IRS can require tax return preparers to be licensed. It wasn't just a question of failing to follow the rules.

Ckenefick (talk|edits) said:

24 January 2013
In defense of the IRS, the thrust of the Court's opinion is that there is no way the IRS can require tax return preparers to be licensed.

The IRS can certainly do so if given the authority by Congress. And this is where the IRS failed to the follow the rules, with respect to its rule-making authority...wherein it had none.

Ricky (talk|edits) said:

24 January 2013
A very basic concept that we'd like for the government to crack down on unscrupulous, fraudulent preparers. But the govt. never stops there. That "net" gets larger and larger, and one day it carries you with it. The IRS' power to audit taxpayers is preferable.

I believe Congress could limit fraud by slowing down refunds so that withholding can be verified, and require a separate form (non-1040) filing for refundable credits (EITC, etc.)

WEISSEA (talk|edits) said:

24 January 2013
NAEA just reported "In breaking news, the Department of Justice (which serves as IRS' attorney) filed a widely expected motion to suspend Judge Boasberg's January 18th injunction, pending appeal of the Loving vs. IRS"

Death&Taxes (talk|edits) said:

24 January 2013
If the news story I linked earlier is true, did they not ask the same Judge Boasberg? I suppose they have to do so. If he turns them down, is their next appeal to the entire DC Circuit?

Vetteman901 (talk|edits) said:

24 January 2013
The IRS seems to be judge, jury and executioner. Taxpayers have a Taxpayer Advocate, where's the Tax Preparer Advocate? The organizations we all pay dues to, should take some of this due diligence B.S. to the courtroom, and see if the IRS has the authority to write it's own policies, without Congressional approval. What say you all?

JR1 (talk|edits) said:

January 24, 2013
Oh, I hope they do ask Boasberg. I think I hear him laughing!

Ckenefick (talk|edits) said:

24 January 2013
The IRS seems to be judge, jury and executioner.

Well, that's the *quirky* thing about certain governmental agencies. In 5th grade we learned about the separation of the branches of government and how that was important: executive, judicial, legislative. I think the first three articles of the Constiution say something about this.

As a general proposition, the IRS is exactly as Vetteman901 describes - the judge (1) where do you go if you have to appeal an audit finding - you go to the Appeals division of the IRS (2) is there an independent jury at Appeals - IRS will tell you none is needed as Appeals is independent, but it isn't (3) and who is the executioner that comes to get your money via lien and levy? Well, the IRS is, of course.

The fact that an Agency rolls all three branches of government into one is not uncommon.

But in the immediate case, the IRS is really getting a lesson in procedure since the plaintiff went outside the IRS, to a *separate,* *true,* *distinct* and *real* branch of government - an independent court. Really, it's no different than what we have to do sometimes in our dealings with the IRS. And I'm not talking about petitioning an Administrative Court, like the Tax Court.

Ricky (talk|edits) said:

24 January 2013
Here is the IRS' motion to suspend the injunction, pending the appeal:

http://www.ij.org/images/pdf_folder/economic_liberty/irs_tax_preparers/irs-motion_suspend_injunction-1-23-13.pdf

Ckenefick (talk|edits) said:

25 January 2013
Maybe it will be lifted, maybe not.

All in all, I find the IRS' arguments pretty unpersuassive. "Irreparable Harm?" Can't people just file amended returns if bad preparers screw them up? And how can it be irreparable if (1) Congress later decides to pass a law to regulate preparers. In which case, the court's injunction is more or less temporary. (2) In addition, how is it "irreparable" if we've gone on since 1913 until very recently with no regulation of preparers? Doesn't seem we suffered "irreparable" harm in the 90 or so years preceding the preparer regulation rules. And note that Nina Olsen used similar language, but not quite. She's smart. She chose her words carefully. She merely said "grievious harm." Not "irreparable harm." I love the other arguments too: "People will sue the government." "Preparers will want their money back." "There will be class action lawsuits."

Maybe they should have thought about all this before they exceeded their authority.

Maybe return preparers should come forward and say, "Okay. More time it is. More time for us to band together, form a unified organization and we'll self-regulate ourselves, with our own compentency exam, just like the CPA and EA profession has done."

By the way, the IRS attorney included his e-mail address in the motion...

And what is JR1's guy saying about all this?

NMexEA (talk|edits) said:

25 January 2013
I've done quite a lot of administrative law over the years so I read the government's application for a stay pending appeal with interest. I'm unwilling to guess whether the application will succeed but I can say that I'm not convinced that the government will probably prevail on appeal. The District Court's opinion was pretty tight. There's nothing basically wrong with it that I can see but I can see some pretty serious objections to the government's analysis.

We should know pretty quickly.

Death&Taxes (talk|edits) said:

25 January 2013
As I read it, they are filing for a stay of the injunction; they will still continue the appeal even if he rejects it.

Sumwun (talk|edits) said:

25 January 2013
NMex, you have probably already worked out that I am not a lawyer, but didn't the government have to put forward that argument just to get a stay of the injunction (whether it be 30 or 14 days) just to get them into the appeals court without being on the back foot? My reading of the motion is that it is a doughty effort at getting to the next level.

Ck, I hear you. See the link at http://www.taxalmanac.org/index.php/Discussion:Can_I_Still_Call_Myself_a_RTRP%3F. The Association of Taxation Technicians in the UK is somewhere between RTRP and EA over here. The Chartered Institute of Taxation is broadly equivalent to the EA. The last time I looked, the CIOT's coat of arms included two owls (indicating wisdom) at the same height (indicating mutual respect between the tax authorities and the profession). I have been away from the UK for over eleven years now, so that may now be the stuff of legend. What bothers me about the RTRP exam is that I learned more about passing an exam than I did about taxation and, frankly, ethics. That's not how it should be. If I can scrape together the money, I am determined to do the NCSEA's EA course this summer and fall. However, there is still a gaping hole between EA and RTRP and the tax profession really should think about filling that with trained, educated, suitably-apprenticed professionals.

Ckenefick (talk|edits) said:

25 January 2013
they will still continue the appeal even if he rejects it.

Yes, of course. But this injuction puts the IRS in a big near-term bind. The IRS basically has to stop all regulating the minute the court's original ruling came out. IRS is saying, "Please let us continue regulating in the interim, until this all gets sorted out by the courts."

Ck says - IRS should stand in line. I never understood why a case like this gets fast-tracked when the private citizen has to wait forever to have his or her case heard owing to a backlog in the courts.

Gazoo (talk|edits) said:

25 January 2013
The quality of the motion makes little difference. It's the letters the judge and his family received this week that could turn the case around. I think we'll see a different judge on the bench when the matter reconvenes. The judge might just go ahead and decide for the IRS without the need for a hearing the briefs are so clear on their face.

Death&Taxes (talk|edits) said:

25 January 2013
"More time for us to band together, form a unified organization and we'll self-regulate ourselves, with our own compentency exam, just like the CPA and EA profession has done."

I am looking up for flying pigs.......that prescription is a dream....and if it happened, someone would come along and sue NATP, NSA or whatever organization that takes on self-regulation. It is a shame that it probably will never happen, perhaps because unlicensed preparers are nationwide, unlike CPA and attorneys where individual state societies can have input. Yes, we EA's are nationwide too, but there are less than 50,000 of us.

So in the meantime, unlicensed preparers (those who don't post here) can play audit lottery and disregard due diligence or anything else it says or implies in Circular 230. Alas, for every respected unlicensed preparer like Robert Flach or our wonderful JR, there are too many Mo' Better Taxes.

Ckenefick (talk|edits) said:

25 January 2013
How is an unlicensed preparer any different than an unlicensed private citizen that only prepares his own return (aside from volume)?

Death&Taxes (talk|edits) said:

25 January 2013
How are the bad ones different? They are engaging in tax preparation and practicing consumer fraud.

Admittedly many who employ these people don't care as long as IRS doesn't come knocking, so perhaps there is a bit of a conspiracy here, an unwritten one, but there is that element.

Ckenefick (talk|edits) said:

25 January 2013
How are the bad ones different?

Different than what - different than the bad private citizens that prepare their own returns or different than the good private citizens that prepare their own returns?

I didn't think it was the IRS' job to police consumer fraud.

And, I don't think a private citizen has to pass a competency exam.

Ukbones (talk|edits) said:

25 January 2013
"How is an unlicensed preparer any different than an unlicensed private citizen that only prepares his own return (aside from volume)?"

Profit motive.

Ckenefick (talk|edits) said:

25 January 2013
So does a private citizen, by not having to pay someone else...

CathysTaxes (talk|edits) said:

25 January 2013
So is anyone going to be gutsy enough to do a chargeback on their credit card to get a refund of the PTIN fees from the IRS?

Ukbones (talk|edits) said:

25 January 2013
"So does a private citizen, by not having to pay someone else..."

You'll have to do better than that nonsense.

Gazoo (talk|edits) said:

25 January 2013
My health is so bad that I couldn't qualify for my pilots license so I declared myself to be a Sovereign Pilot. The City Attorney finally gave in and gave me a permit to go up in a hot air balloon but not a plane. "Give that nut his piece of paper and get him out of my office," he says.

JR1 (talk|edits) said:

January 25, 2013
I've asked my guy about his thoughts. Will share response when I get it.

All the cr@p about protection is just bunk anyway. Does the AMA really do a great job of eliminating bad docs? You know what they call the ones who finish med school in the bottom quarter of the class? Wait for it....Doctor. Has the ABA done anything to rid the planet of dumb attorneys who file frivolous suits only to earn a few bucks off someone else's back? Has the AICPA done a good job of protecting against the public fraud known as 'auditing' which the public believes is to unearth malfeasance but which the engagement letter says does NOT unearth anything unless it's dropped on the desk with notes and no other options but to disclose it! Has the gov't effectively ever protected anyone from anything?

Buyer beware is probably the only best slogan. Sadly, we live in a victimized, litigous society.

Gazoo (talk|edits) said:

25 January 2013
I trust the local juries and judges to decide what is frivolous and what is not. As corporations get bigger and bigger and more separated from the public, we either need to regulate them effectively, or litigate against them in proper cases. The local jury is a precious institution and we need to preserve it and I'll trust it over Rush Limbaugh any day. But I don't blame the rank and file conservatives for continually belly-aching about litigation because they have been programmed to say that by their media and apparently it never crosses their minds that the corporations own and are paying for that media. Divide what they say by two, and it's closer to the truth.

If you'll notice some of the giant corporations don't even put a street address on their websites today. They don't want to hear from you, they just want you to buy and suck it up if you don't like it.

Death&Taxes (talk|edits) said:

25 January 2013
You're forgetting the other fraudulent element here and that is the money being expended in fraudulent refunds is yours and mine. Who will police this? The FBI?

Of course, someone will get on his hobby horse and talk about all the other efforts to rip-off the government, as if this makes filing fraudulent returns somehow understandable.

Gazoo (talk|edits) said:

25 January 2013
Our court system works, and if anything the recent IRS case proves it. If the IRS ends up losing, or if the law is against them to the point where they ultimately decide to walk away from it, then it's our legal system in action.

As a rule of thumb, courts come in when legislatures are reluctant to do the jobs they were elected to do. But the courts cannot go out and look for a problem and solve it like a legislature can, they must wait for a case or controversy to come in the door and file the case or appeal. This is a check on the court system: that they must wait for a case or controversy before acting, and you'll hear a lot more about courts when the legislature is not doing it's job.

Ckenefick (talk|edits) said:

25 January 2013
You're forgetting the other fraudulent element here and that is the money being expended in fraudulent refunds is yours and mine. Who will police this? The FBI?

You guys are getting off point. I'm not debating the merits of having such a program. What is at issue is whether or not the IRS had the authority to issue regulations whereby IRS could regulate preparers.

And here's some snipets from the preamble to the regs:

Section 330 of title 31 of the United States Code authorizes the Secretary of the Treasury (the Secretary) to regulate the practice of representatives before the Treasury Department.

The Secretary has published regulations governing the practice of representatives before the IRS in 31 CFR part 10 and reprinted the regulations as Treasury Department Circular No. 230 (Circular 230).

And here's another snipet from the final regs, which reference the proposed regs:

The proposed regulations provided that registered tax return preparers are practitioners under Circular 230 and described the process for becoming a registered tax return preparer, as well as the scope of a registered tax return preparer's practice before the IRS.

So, have we jumped from "representatives" to "tax preparers" to "practitioners?"

And from the judge's decision:

This case turn on whether certain tax-return preparers are representatives who practice before the IRS, and thus are properly subject to the new regulations.

Anybody remember this discussion:

http://www.taxalmanac.org/index.php/Discussion:Does_Representation_%3D_Preparation

...maybe Ck was on to something...

Gazoo (talk|edits) said:

25 January 2013
One way our Congress could act would be to pass a law that provides that the IRS cannot require licensing or anything else to be a return preparer. Congress could do that. Has anyone from either Party proposed such a Bill? (Would they?) I don't know. I don't think so. The ultimate failure here is not the IRS or the courts, it's the U.S. Congress...they could clear this thing up and they are paid to do so. They could clear this whole thing up by legislating one way or the other.

Congress still wants to pretend that people can prepare their own taxes (though none of the Congresspeople do). Even one of our Treasury Secretaries had a problem preparing his own return. Strangely, all the mistakes he made were in his favor as I recall, but my memory could be faulty. :)

JR1 (talk|edits) said:

January 25, 2013
Here is the latest release from the org spearheading the work. The belief is that it's unlikely that the judge will buy what he just didn't buy...

http://www.ij.org/irs-tax-preparers-release-1-24-2013

Ricky (talk|edits) said:

25 January 2013
You've got to love the fact that Turbo-Tax (Intuit) feels the need to stick its nose in this situation. Here is a company that ceaselessly advertises "free" tax preparation software, free tech support, free tax consultations from CPAs and EAs, all the while charging practitioners exorbitant prices for tax prep and accounting software.

On another note, today is the "IRS EITC Awareness Day (see link below), to be sure no one passes up their free money (lest you try to actually earn it as a tax preparer....)

http://www.eitc.irs.gov/ptoolkit/awarenessday/

Spell Czech (talk|edits) said:

25 January 2013
This is awfully confusing. I understand that there was a forecast of snow in DC today and that the federal workers employees annuitant-entitlees all went home.

The article from "the org spearheading the work" said that 167 IRS people were working on the project to register everybody to do everything. Seems a lot cheaper, maybe, to let market forces prevail and lock up those who step over the line, doesn't it?

JR1 (talk|edits) said:

January 25, 2013
Well, let's be fair. One guy to write the database. One to do the press releases. One to fetch coffee. One to watch the internet connections were golden. A manager. And 162 more getting paid.

TOrahaCPA (talk|edits) said:

25 January 2013
JR1

The belief is that it's unlikely that the judge will buy what he just didn't buy...

Exactly Lol

Ckenefick (talk|edits) said:

26 January 2013
Maybe, maybe not. The new motion is a completely different matter per se.

Anyway, what would the judge have decided if the EPA or the USDA had issued those licensing regulations?

Answer: The same thing (but in a much shorter opinion). The EPA's regulations would have been just as invalid as the IRS'. Just because the issue might be more proximate to the IRS' function doesn't really mean anything.

NMexEA (talk|edits) said:

26 January 2013
Sumwun, a showing that the government is likely to prevail on appeal is not necessary to perfect the appeal itself only to support the stay of the district court's injunction. If the district judge doesn't grant the stay, the court of appeals might.

JR1 (talk|edits) said:

January 30, 2013
Update:

http://www.ij.org/irs-tax-preparers-release-1-30-2013

Ckenefick (talk|edits) said:

31 January 2013
I laughed when I read that. That was not only funny, but an outright pointed attack, calling into question pretty much everything the IRS says every time it opens its mouth. I too found the "irreparable harm" argument unpersuassive and laughable. But I do love the article's angle, "Irreparable harm from what - for having to turn off a few computer?"

Seriously, what's Congress doing tonight? All they have to do is put forth a one sentence bill and everyone can vote it: "This bill, hereinafter the 'Get Back at the Court for Making the IRS Look Foolish Act of 2013' authorizes the IRS to regulate tax preparers."

Seriously, that's all it would take. 5 seconds to draft it, 30 minutes to vote on it, and 10 seconds for the President to sign it.

JAD (talk|edits) said:

31 January 2013
You are applying concepts of logic and efficiency to our government.

Ckenefick (talk|edits) said:

31 January 2013
But if this harm is irreparable, surely Congress would jump right in, immediately, and with both feet, right?

Death&Taxes (talk|edits) said:

31 January 2013
"The Economist explained that the IRS’s licensing regulations “threaten to crush . . . small, local” tax preparers and are “likely to push mom and pop into another line of work.”

Where was the Institute for Justice when Sam Walton and company pushed lots of Mom & Pop retailers out of business? Give me a break....or as we used to say, 'you fiddle while I pull up my socks.'

Ckenefick (talk|edits) said:

31 January 2013
"The Economist explained that the IRS’s licensing regulations “threaten to crush . . . small, local” tax preparers and are “likely to push mom and pop into another line of work.”

Why is this? Because the can't pass the test?

NMexEA (talk|edits) said:

31 January 2013
I am no fan of the Institute for Justice but I agree with the article on this point; irreparable harm must be shown to obtain a stay of the District Court's order and I don't see it here. As for Congress, don't look for that august body to address the issue anytime soon. They don't like the IRS either.

Ckenefick (talk|edits) said:

31 January 2013
The I.J. is clearly slanted and we need to be careful with that (i.e. take what they say with a big grain of salt).

Ckenefick (talk|edits) said:

31 January 2013
...and I don't think Sam Walton did anything illegal.

JR1 (talk|edits) said:

January 31, 2013
It's one thing when the free market causes something, quite another when gov't attacks its own people.

Ckenefick (talk|edits) said:

31 January 2013
Exactly. I don't even know if the I.J. handles cases that don't involve the government.

Ricky (talk|edits) said:

1 February 2013
Congress Boustany has asked the IRS to clarify its position regarding the PTIN program:

http://www.accountingtoday.com/news/Congressman-IRS-Explain-Contradictory-Tax-Preparer-Regulation-Guidance-65565-1.html?ET=webcpa:e6649:63710a:&st=email

"With the 2013 tax filing season having just gotten underway this week, Oversight Subcommittee Chairman Charles Boustany Jr., M.D., R-La., wrote a letter to IRS Acting Commissioner Steven T. Miller regarding concerns that the ruling and subsequent lack of guidance could be causing serious and unnecessary confusion for taxpayers. Boustany pointed to the IRS Web site and indicated that it contained multiple references that read as if the invalidated preparer requirements remain in force.

He noted that the IRS.gov home page provides a link entitled, “Statement on Court Ruling Related to Return Preparers.”

Ckenefick (talk|edits) said:

1 February 2013
Is this the same IRS that is claiming the court's decision is causing harm?

Doug M (talk|edits) said:

1 February 2013
AICPA email I just received

IRS closes PTIN system due to court ruling on preparer registration. Here is a snip from the article:

As a result of the ruling, the IRS also had to close the PTIN system, which will remain closed while the courts consider the IRS’s appeal of the decision. Without the PTIN system available, it is impossible for CPAs or staff to obtain or renew a PTIN, which is still required to be added to a tax return if signed by a paid tax preparer.

Kevinh5 (talk|edits) said:

1 February 2013
Wow, I wonder why the AICPA is so late in sending news to its members? This was out on the 19th or 21st of January by both NAEA and NATP to their members.

Ricky (talk|edits) said:

1 February 2013
I think the time is ripe to see the program go down the drain. I think the appeals court will tell the IRS to take this up with Congress and the House will decline to give the IRS this additional authority.

Doug M (talk|edits) said:

1 February 2013
Kevin--I am aware of the turmoil, (District Court ruling of 1/18) I thought the system was still available for people to obtain a PTIN.

Kevinh5 (talk|edits) said:

1 February 2013
No, NAEA and NATP both reported the PTIN system down 12 days ago, though both wondered why, as did the AICPA.

Death&Taxes (talk|edits) said:

1 February 2013
Anyone want to return to putting their SSN on the return?

Ricky (talk|edits) said:

1 February 2013
Without the RTRP program, there is little reason to keep the Return Preparer Office operating. The PTIN would simply go back to being a substitute for the preparer's SSN, and no annual fee.

Ricky (talk|edits) said:

1 February 2013
Anyone want to return to putting their SSN on the return?

No, not really. But if the choice is between the RPO/PTIN watchdog approach or use my SSN, I'd GLADLY use my SSN.

Taxea (talk|edits) said:

1 February 2013
I don't. I don't remember, off-hand, but I did read that those who have not renewed can still efile. I intend to use my PTIN number on my filings because my EA is renewed and the court did not address the issue of TPIN renewal. I don't understand why the IRS shut down the site when it is obvious that PTIN renewal is still an issue.

Has anyone tried to fax a renewal to the office? If that doesn't work how about certified USPS. If they sign for it they can't say they didn't get it.

Death&Taxes (talk|edits) said:

1 February 2013
Originally the PTIN, which as Ricky notes was a substitute for the SSN, and which was given by IRS as I recall, was not renewed every year, so if the department is shut down, why try to renew? Use the PTIN especially if it predates the RPO regime.

Death&Taxes (talk|edits) said:

1 February 2013
I wonder if Mr. Washington wants to join in with Ms. Loving et al.

Assuming he avoids a lengthy term in the slammer, he will be able to hang out his shingle again.

http://www.nj.com/hudson/index.ssf/2013/02/jersey_city_man_pleads_guilty_12.html

NMexEA (talk|edits) said:

2 February 2013
I would think that most tax preparers would already have obtained/renewed their PTINs for this season. I certainly have and I'm not even doing any returns other than my own. Probably the reason the site is closed is that the IRS has to re-figure what the user fee should be.

Taxea (talk|edits) said:

2 February 2013
What doesn't make sense is they totally closed down the PTIN office. You can't fax, email, call or do anything on line...yet the IRS maintains that the registration/renewal process will continue to be required (this because the court didn't address this in their findings.) I haven't efiled any returns yet and due to circumstances beyond my control I have not renewed but my EA license is current so I will argue it if and when I have to.

Deback (talk|edits) said:

February 2, 2013
Wasn't there a deadline of 12/31/12 to renew your PTIN?

Kevinh5 (talk|edits) said:

2 February 2013
Ricky, I received this email today (Saturday). Let's see how long the AICPA takes to notify you of the same:


February 2, 2013


Kevin C Huston, EA MBA ChFC CLU,


On February 1, 2013, United States District Court Judge Boasberg issued a Memorandum and Opinion Order. In this order he clarified two points:

   Defendants’ Motion to Suspend Injunction Pending Appeal is DENIED; and 
   The Injunction is MODIFIED to make clear that the IRS is not required to suspend its PTIN program, nor is it required to shut down all of its testing and continuing-education centers; instead, they may remain, but no tax-return preparer may be required to pay testing or continuing-education fees or to complete any testing or continuing education unless and until this injunction is stayed or vacated by the Court of Appeals. 

Due to this order, the IRS contacted NATP with the following information:

The recent Loving v. IRS court ruling does not affect the requirement for paid tax return preparers to have and use a PTIN. As such, the PTIN system is now reopened for processing renewals and new applications. Please note the alert that is located on the login screen:


   ALERT: The PTIN system is being updated to reflect current requirements. Until those updates can be completed, a screen titled Continuing Education (CE) Completion may appear during PTIN renewal. Please check either one of the boxes on that screen. This information is NOT being collected, but you must check a box to advance to the next screen. We apologize for any inconvenience.


The PTIN helpline is tentatively planned to open on Monday.

As for the paper PTIN renewals and application, the IRS will begin expeditiously processing them on Monday.

Rely on NATP to keep you informed about these important industry developments as further progress and news becomes available.


National Association of Tax Professionals (NATP) PO Box 8002 Appleton, WI 54912-8002 800.558.3402

Kevinh5 (talk|edits) said:

2 February 2013
http://www.reuters.com/article/2013/02/01/usa-tax-preparers-idUSL1N0B1K2H20130201

Bob McKenzie shared this link with me on Facebook.

Death&Taxes (talk|edits) said:

2 February 2013
My reading would be IRS would continue to be able to give the test and the designation of RTRP, meaning those who pass might have a leg up in advertising their ability over Mr. Washington above, but we have seen how much work it takes to get taxpayers to identify with we EA's, who have already passed a more rigorous test so perhaps the designation will mean little. For unenrolled preparers who have built their practice, nothing changes, yet if I were starting a shop, I might want to attain RTRP (if not EA) simply to be able to say, 'well, IRS knows I know more than that old fossil up the street.'

Tax Writer (talk|edits) said:

2 February 2013
For unenrolled preparers who have built their practice, nothing changes, yet if I were starting a shop, I might want to attain RTRP (if not EA) simply to be able to say, well, IRS knows I know more than that old fossil up the street.

I agree. I also believe that this is where this court case is going-- the RTRP requirement will be voluntary, at least for now. I wonder if the courts are going to put the licensing requirement back on the states? I'd hate to see a motley patchwork like we have in CA and Oregon. This is one area where I think the IRS is going to do a much better job of licensing then the states.

NMexEA (talk|edits) said:

2 February 2013
Hm. For some reason I have a difficult time seeing the IRS expending public resources to run a voluntary program. If there's no authority to require preparer testing, the idea of offering a non-regulatory credential is really "out there." that's more properly the province of a private professional organization.

Death&Taxes (talk|edits) said:

3 February 2013
"I have a difficult time seeing the IRS expending public resources to run a voluntary program.' Like Enrolled Agents?

Of course, one way to make the RTRP attractive would be to take away the ability of the unenrolled preparer to represent the client at any point with the Service......just thinking out loud, mind you!

Taxea (talk|edits) said:

3 February 2013
Just a few thoughts:

Kevin thanks for the info...I got it this morning from "Tax Girl". Monday is going to be hellish for the IRS office, I am sure.


Tax Writer...does CA actually do anything to regulate the preparer or are they just required to register their business so the state can collect business taxes? Hawaii charges only $25. for a General Excise Tax license for every business in Hawaii. This is a one time fee, no need to renew and is only for the purpose of collecting business income tax. This is the only state regulation on paid preparers. They don't have to register with the Dept of Consumer Affairs, as do any of the other businesses that are regulated by a trade license. Even us EA's, though licensed through the IRS don't need to register with the state.

NMexEA no kidding! Along with I don't see anyone, not required to test or CPE, doing so voluntarially. Do any of you know any non-regulated/licensed preparers who do very much to learn anything more than they have to...or even do any research when dealing with anything foreign to them on a return. Or, trust the program to provide the correct information by use only the interview or input sheets to complete the return. And even do returns that are way beyond their expertise in complexity. I do and I want to see them weeded out.

D&T That just puts the burden on us to correct all their errors. I will amend their returns but I will not represent a client when someone else has prepared the return or amended return.

JR1 (talk|edits) said:

February 3, 2013
Taxea, while I don't see anyone taking the test vountarily, many of us UUU'Prs (Unenrolled, Unlicensed, Unregsitered Professionals) do indeed take continuing ed and stay awake, belong to professional groups JUST like all the other pros out there, but many of whom DO sleep during the seminars or take on line courses...A professional isn't determined by the letters, but by behavior and competence. We've seen enough incompetent and well lettered folk here to need not make further comment on that.

Ricky (talk|edits) said:

3 February 2013
Thanks Kevin. Glad to hear that the motion was denied, but I wished there had been no modification of the injunction.

Ckenefick (talk|edits) said:

3 February 2013
I'm hardpressed to believe the program will become voluntary (long-term). That's not why we have this program. The program is after crappy preparers who are forced to reveal themselves and who would otherwise not do so voluntarily. But TaxWriter does make a point - maybe they keep the wheel turning for a little while instead of expending dollars to shut the program down...with the belief that the IRS will win on appeal or that Congress will act. This might be more cost effective than shutting down completely and then starting back up from ground zero.

I will tell you this though - coupling preparer identification with e-filed returns makes it real easy for the IRS to track things. Don't you find those statistics interesting when some preparer is accused of filing false returns? The IRS press release includes all the numbers...numbers of returns filed, estimate of tax lost due to intentional/fraudlent mis-reporting. How is it that the IRS can gather than data so readily?

Tax Writer (talk|edits) said:

3 February 2013
"Tax Writer...does CA actually do anything to regulate the preparer or are they just required to register their business so the state can collect business taxes?"

Yes, there's a mandatory registration to be a CTEC, and a yearly CPE requirement. But unlike Oregon, there's no exam requirement. They just require you to register, pay a fee, and take classes every year. To their credit, they also do a pretty good job with enforcement, and they've caught some scammers.

I like D&T's idea about stripping unenrolled preparers from having any representaion rights beyond what's allowable using a Third Party Auth.

And Although I would like the RTRP to be mandatory, I think that making it voluntary is the first step. Like the EA and the ERPA, it would be voluntary. Maybe the public benefits would become apparent quickly, like comparing licensed and unlicensed preparers, for example.

Tax Writer (talk|edits) said:

3 February 2013
On a side note, does anyone know what the official position of the chains is on this one? Was H&R block fighting to defeat this requirement, or just the opposite?

Ckenefick (talk|edits) said:

3 February 2013
It's in H&R's best interest to weed people out of the profession.

Ricky (talk|edits) said:

3 February 2013
The big chains (including H&R Block) are/were for this. The small mom & pop operations believed this was an attempt by the large tax services to put the smaller ones out of business.

My take is that H&R Block and the others could not very well take a public stance against this. The IRS, David Williams and the RPO were on a roll. Preparers were doing something wrong, and darn it, it was time for them to stop.

Tax Writer (talk|edits) said:

3 February 2013
That's a surprise to me, then. I assumed that the chains would fight this, at least quietly, perhaps? I've been contacted at least a dozen times in the last 12 months by various chains (Liberty, JH, H&R) asking me to become a supervising preparer at a chain store. My office partner has gotten quite of few of these emails, too. I was under the impression that the chains were worried about getting an EA,CPA, or attorney to supervise the unregistered preparers at each location.

Taxea (talk|edits) said:

3 February 2013
JR1 and other UUUP's on this siteplease accept my most humble apology. I did not mean for any of you to feel my remarks were meant for you all. The mere fact that you engage on this site is proof enough to me that none of you are in the same catagory as the UUUP's I was pointing to.

TaxWriter I did taxes in CA over 15 years ago. I am also aware that, at that time, the individual cities and counties required a business license. I had forgotten about the CPE requirement. "Maybe the public benefits would become apparent quickly, like comparing licensed and unlicensed preparers, for example." Who would do this? Much of the public is more interested in getting it done cheap. Only once Uncle Sam makes contact do they consider having it done right...and this only because they feel threatened with 3 squares a day. My understanding is that preparers that work for big boxes are not included in the testing and CPE. They are required to maintain a TPIN. Anyone know for sure?

Chris IMO HRB, and such, create much of the problem by letting their preparers do returns that far exceed their training. (No offense to any of you who work for those businesses and are more than qualified to self-employ or work for a company that will pay you for your worth.) They are out for the money. If anyone would like to read my experiences at HRB which I sent to their Headquarters one year, Im more than happy to share it. I worked in Marin County CA one season and summer. They were great even though the pay was lousy. Then I worked in Hawaii and it was a disaster.

Ricky-I think Tax Writer is correct. Maybe in public but I am pretty sure that HRB, and probably other of the same ilk, did lobby very heavily against the IRS regulations applying to their preparers. I know that the employees have always been encouraged to apply for a PTIN but that was when its purpose was to use it instead of your SSN. I hope the Congress has the wherewithall to authorize the IRS and include all paid preparers to be included in the regulations regardless of where they work or who they are supervised by. Why else would the big boxes be offering supervisory positions to EA's and CPA's on the outside. At the moment it is because they need these people to fulfill the regulations. I have personally experienced the inadept abilities of many employees and it is because the training here is a joke. They actually had their ID tech teaching CPE courses and that was only a couple of years ago.

Ckenefick (talk|edits) said:

5 February 2013
Let's see how long the AICPA takes to notify you of the same:

I just now got an email. I'm sure the AICPA is working hard on getting those tax checklists done...

Cricktaxea (talk|edits) said:

5 February 2013
"I was under the impression that the chains were worried about getting an EA,CPA, or attorney to supervise the unregistered preparers at each location."

That's exactly correct. At the Vegas EA seminars last summer I attended the David Williams talk and when this was brought up I raised my hand and asked if there was any limit or guidelines to how many preparers an EA could supervise and he said whatever number the EA is confortable with since that person is signing off on the returns. If 10 people are doing 100 returns each I doubt if I would be willing to review and sign off on 1000 returns. I was sitting next to a guy who had a H&R Tax Master shirt on. I asked him if he was an EA, he said no but he had over 30 years in the business with a bit of a smug attitude. I commented with that many years in the business he should be able to get his EA, no problem. We didn't talk beyond that but I could tell he was not happy about either needing a licensed pro to supervise his office or get everyone tested licensed.

Bob

JR1 (talk|edits) said:

February 5, 2013
Thanks, Taxea. And anyone with EA deserves respect, you earned those initials...

Yah, I recall the big firms were way opposed to all this until they got all the exemptions built in making their shops shams. As long as they didn't have to provide continuing ed and all...and doesn't that kind of fly in the face of the whole notion of doing this to protect the public? Right.

CathysTaxes (talk|edits) said:

5 February 2013
Has anyone noticed (besides me) a decrease in the number of emails from CPE providers since the news of the court throwing out this requirememt?

Kevinh5 (talk|edits) said:

5 February 2013
Cathy, do you think SOME of that could be because they know we are BUSY (or trying to be)?

CathysTaxes (talk|edits) said:

6 February 2013
Kevin, that would be the intelligent thing to do, but before the IRS lost, I was still getting tons of emails for training.

Death&Taxes (talk|edits) said:

7 February 2013
Chicago is getting into the act, and note for you JH and HRB haters, they have gone after them too.

http://www.chicagobusiness.com/article/20130205/BLOGS02/130209916/tax-preparers-flunk-city-review-big-time

Anyone from Chi-town know if Love Distributed Services, one of the three in compliance, is any relation to Ms. Loving?

Bilbo (talk|edits) said:

20 May 2013
Is there any chance that the $63 fee gets booted?

So. Tax season is over. I have finished the two 1040s and the one 1065 that I have to do for others. Now it is pro bono but being a CPA I sign any return I do - sort of. I cross out the "Paid" of the Paid prepared block. Fill out all the info, but in the signature block I write "Pro Bono". I paid the $63 and got my number even though I didn't get paid. Heck, they might change out a light fixture and someone argue barter.

Now in normal seasons I would charge a fee to these guys, and I would be forced to pay $63 for 3 returns. There has to be a ton of us guys that are currently busy with other things and keep one or two old clients as favors. If the IRS doesn't have the authority to force the good stuff like continuing education, I sure wish we could Kabosh the bogus fee. Is there any hope, or no?

Bilbo

PS - yes I also had to buy software to do the free returns for the client. I know - crazy. If someone wants to know how I made it not so crazy they can PM me.

Guya (talk|edits) said:

20 May 2013
And...you hopefully bought E & O insurance too?

Bilbo (talk|edits) said:

20 May 2013
No but I have a really good engagment letters and issues letter that are signed by both partners.

We will be killing this partnership this year. Then they will just have a couple of 1040s and schedule C.

EatonCPA (talk|edits) said:

20 May 2013
Bilbo I wouldn't count on it. I was in an online AICPA webinar about 2 weeks ago and it is expected that either the IRS is going to win on appeals or Congress is just going to give them the authority to regulate preparers. The Senate and House have both drafted prelim legislation to that effect. So not only are we likely going to see continuing fees, ultimately the whole kit and kaboodle of continuing ed and testing, etc will be back in force. (Though one wonders how keen Congress may be to extend IRS powers after the most recent political fiasco.)

Kevinh5 (talk|edits) said:

20 May 2013
Rumor is that Congress will give the IRS more than the IRS asked for. In other words, it may be worse for you RTRPs because of Loving, not better.

Death&Taxes (talk|edits) said:

20 May 2013
In the current climate (Day 11 of 'the scandal'), do you really think Congress will be willing to give IRS anything?

Ckenefick (talk|edits) said:

20 May 2013
Good points. I've always thought regulation was a very good thing, and I'd best that most of you do too, but the IRS simply went about it in the wrong way. IRS went about it unilaterally in a heavy-handed kind of way, without any real authority to back up their regulations.

K5 might very well be right about all this. I tend to think the scandal will pass over, largely unaffecting any new efforts towards regulation, but that's just me.

Bilbo (talk|edits) said:

20 May 2013
I actually think the scandal is a psuedo scandal. I would love for the IRS to work harder on abuse in the nonprofit arena. State attorney generals as well for that matter. Every dollar that goes to fake/fraud orgs don't go to real nonprofits. And the recession hit real nonprofits hard.

In any event, looks like the fee is here to stay.. I think that is too bad. I don't mind the regulation but the fee is a pain. I actually think the regulation is proobably a good idea. And the regulation should actually pay for itself - without a fee.

Skassel (talk|edits) said:

20 May 2013
There is NO way that Congress is going to give the IRS ANY additional authority over anything. It isn't going to happen and there is no way that the courts will overturn the ruling.

JR1 (talk|edits) said:

May 20, 2013
Agree with Steve.

Frankly (talk|edits) said:

21 May 2013
"I actually think the scandal is a psuedo scandal."

Yes, a tempest in a teapot. Those squealing the loudest are the ones to invesitgate first. Any C(4) that even hints at political involvement is suspect. Why should the rest of us pay the taxes for somebody else's political agenda?

JR1 (talk|edits) said:

May 21, 2013
Really? Wow. The thoughts of America these days. When it was using IRS for political purposes that got this #2 on the Nixon Impeachment articles. But it's ok for the Emperor. Wow. Sorry, Frank, but those with leftist agendas got immediate approval. So there may be a problem more than a teapot. Having worked with that division in the past, some of the most helpful and professional folks at IRS. They were taking orders from somewhere. By definition, gov't employees don't have that kind of initiative.

Ckenefick (talk|edits) said:

21 May 2013
I posted on the General forum (or whatever it's called) that this isn't all that surprising to me.

JR1 and Skassel's points are well taken, and I'm not sure how future regulation will play out. On the one hand, seems Congress has no trouble throwing public policy, social programs, and whatever else, into the Tax Code and having the IRS administer it. This is one of the reasons the tax code is so damn big and complex. I think the IRS can reasonably point to some large successess; specific instances where preparer regulation has led to charges against bad preparers. Do not, for a second, under-estimate the IRS' use of that PTIN. The IRS can very quickly run a search on a particular PTIN, pull the returns prepared by that guy, run a quick DIF on them all, and quickly find out if a majority of these returns are "out of range." Easy pickins' really.

But at the same time, there is a general disdain for the IRS by Congress, even before the Tea Party debacle...so I guess we'll have to wait and see.

Frankly (talk|edits) said:

21 May 2013
"... those with leftist agendas got immediate approval."

If that was true we might have a problem. But there is no evidence of that, speculation of rightist talkshow hosts notwithstanding.

Tax Writer (talk|edits) said:

21 May 2013
There is NO way that Congress is going to give the IRS ANY additional authority over anything.

Actually, I agree with Kevin. I'm not sure how the appeal is going to play out, but the IRS has already been granted the right to offer the RTRP exam on a voluntary basis. They just haven't done it yet-- maybe because they are going to try and win the whole enchilada, who knows? I've said it before, I hope this doesn't get kicked back to the states. Oregon does a pretty good job with their program, but CA's "licensing" has significant issues.

I'm guessing that at the very minimum, the RTRP exam will be reintstated and unenrolled preparers will lose any Circular 230 rights they currently have.

As for JR1, seriously... you are 10X smarter than half of the preparers on this board, myself included. If you ever want to make a friendly wager on you passing the EA exam, let me know. I'm sure you could do it the first time, probably blindfolded.

Bilbo (talk|edits) said:

21 May 2013
Frankly, it isn't just the C(4). The one that came across my table at 5K a seat for a political event is a 501(c)(3). The event was headlining Ted Cruz and hosted by a right wing talk show host. Anyone wants a link, PM me. Senator Grassley, where are you when we need you? I mean if you are willing to go after hospitals....

JR1, the Nixon comparison is a nonstarter as far as I am concerned. Nixon was a hood that was charged (Article 2) with trying to obtain information from the IRS and use it for political purposes. This isn't that. By a long shot. But we didn't need to get to article 2 for Nixon. He was having his staff commit burglary.

Death&Taxes (talk|edits) said:

21 May 2013
I suspect the next loud talking point will be to get rid of FATCA because it gathers information. While we are at it, we can get rid of FBAR reporting also. Soooooo many of my middle and upper middle class clients worry about their foreign assets having to be reported.

JR1 (talk|edits) said:

May 21, 2013
Well, actually...Bilbo. At the risk of mentioning something you may deem political...a contributor that had to be named to one of those applicants has been audited for apparently just that purpose, and after spending a half mil to defend himself, got a no change. So that information that they've been requesting beyond the ordinary (and if you're ever been involved this, there is a LOT of ordinary already!) is intrusive and out of bounds. So not only are there delays and aggravations, but there has been the Nixon breach of gathering info for political purposes. That should give us pause. Nixon was a hood. How would you describe the emperor?

JR1 (talk|edits) said:

May 21, 2013
Well, actually...Bilbo. At the risk of mentioning something you may deem political...a contributor that had to be named to one of those applicants has been audited for apparently just that purpose, and after spending a half mil to defend himself, got a no change. So that information that they've been requesting beyond the ordinary (and if you're ever been involved this, there is a LOT of ordinary already!) is intrusive and out of bounds. So not only are there delays and aggravations, but there has been the Nixon breach of gathering info for political purposes. That should give us pause.

Gazoo (talk|edits) said:

21 May 2013
The IRS shouldn't have to single out any group because they should be doing the job they are paid to do and that is to review every c3 and c4 carefully. If they need more staff to do their job, then raise the filing fee.

The point that's getting lost in all this is that there are definite problems in the non-profit area with bogus applications across the board and they all need careful scrutiny. It'd be nice if we could have some follow-up too. Otherwise, we need to stop pretending that we have standards and just let everyone operate as a non-profit.

JR1 (talk|edits) said:

May 21, 2013
Like I said earlier, I've had nothing but positive things to say about that section. They're helpful, friendly, and knowledgeable. And thorough! This stuff went well beyond that...

Ckenefick (talk|edits) said:

21 May 2013
This stuff went well beyond that...

It certainly seems that this is correct.

Gazoo (talk|edits) said:

21 May 2013
Well, it was political insanity if it was done for political reasons. We do have to remember that there are elements among the conservatives who have nothing good to say about taxes and the IRS. Some of them even advocate law breaking (the tax cranks). I don't know if the "sovereign citizens" are part of the Tea Party groups or not, but the "sovereign citizenship" idea is a recipe for lawlessness and chaos.

So I do think the IRS can take into account what's going on in society when making predictions. However, at some point the political antennae have to come up and someone must act to stop something that will so obviously backfire.

Also, if the IRS was so proud of their "efficient solution" to weeding out c4 scallywags, they should have been more than willing to share this solution with the Congress, but they were not forthcoming about it when they were asked...so they'll have to suffer the fallout, and I have no doubt that this will be investigated to the nth degree.

Frankly (talk|edits) said:

21 May 2013
Investigating to the nth degree is politically motivated and a waste of time and money. How about an investigation into why congress can't find anything better to do with their time?

Gazoo (talk|edits) said:

21 May 2013
If the IRS had always been forthcoming with the Congress, then I would agree with you. As I understand it, the IRS claims that the reason they singled out certain words for further scrutiny was for efficiency purposes. Well, if that was the case, they should have been proud to tell Congress about it.

(Keep in mind, the IRS had zero chance of hiding this forever since the Tea Party groups were already complaining to Congress and giving them evidence. If nothing else, the IRS is guilty of rank political malpractice and shortsightedness.)

This will also backfire in terms of compliance, because now the tax protesters have something solid or semi-solid to sink their teeth into. They have their "evidence" of corruption, and I feel sorry for you preparers next year who will have to listen to the b*tching and moaning about it.

Snowbird (talk|edits) said:

21 May 2013
I love a good conspiracy theory so here is mine ... this could be an attempt by Democrats to suppress the vote. Something the Democrats are always accusing Repub of trying to do. The Fiscal Times points out in How the IRS Wasted Time Chasing the Tea Party that Tea Party organizations were small potatoes. " Norcal Tea Party Patriots are one of the larger groups ... spent $149,047 in 2011, primarily on a rally at the statehouse and a health care policy forum. Their single largest expense—$44,314—was on merchandise."

However, by frustrating the Tea Parties with the whole process, would discourage voter turnout. Some of the organizations just gave up on the whole process and no doubt didn't pursue a get out the vote effort. Just heard, Lois Lerner, the official in charge of the exempt organizations division plans to plead the Fifth Amendment. More fuel for conspiracy :)

Bilbo (talk|edits) said:

22 May 2013
Snowbird that's funny. JR1 thinks the government it totally inept and you think the Democrats are capable 15 level chess on a national scale.

Here is my theory. Citizens United opened up the way for a ton of applications. Most of the volume on C4s are going into conservative C4s. That's where the money is. So... follow the money. Then when it was reviewed a level up, managment came back down and said broaden the scope - I assume for optics. But maybe not.

I agree with Gazoo. The flyer I got is insulting. It is a bigger abuse in my mind then the poor sap stealing the earned income credit.

I take this personally because I work in this arena and I am careful. For example, I found an old Anne Richards campaign poster. I framed it but I don't hang it in my office, because my office resides with a nonprofit; and it just sends out the wrong vibe. Nonprofits are not to advance political agendas. And even though Anne Richards is long since dead, it doesn't seem right.

Anyway... to get back to my issue. I paid the $63 and did the return - pro bono. Didn't make me a nonprofit.

PollyAdler (talk|edits) said:

22 May 2013
Wouldn't it be something if Woodward and Bernstein got together again to look into this matter? I'd hate to see them get Obama's tail, but I did enjoy the all the presidents men movie and the intrigue and the books. I think with enough pain pills on board, the old team could get the legwork done and assure that justice was served. (Instead of an FBI man turning out to be Deepthroat, this time Deepthroat will be an H1B visa holder from India who was employed by the IRS to work on computers, but who was also a secret member of the Heritage Foundation). Is Bernstein still alive?

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