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H.R. 1485: fairness in U.S. Tax Court.

In 1991 Congressman Leon Panetta (D-16-CA) introduced H.R. 1485 to "amend the Internal Revenue Code of 1986 to provide that certified public accountants and enrolled agents may represent taxpayers in Tax Court cases involving $10,000 or less." Responding to concerns expressed by the National Society, Congressman Panetta sponsored this legislation to inject a modicum of fairness into the U.S. Tax Court system.

In introducing H.R. 1485, Congressman Panetta stated that "this legislation is needed to provide fairness to taxpayers who have disputes with the Internal Revenue Service in cases involving $10,000 in tax or less. Current law denies them an opportunity for the least expensive, most effective possible representation before the Tax Court in these cases."

To the benefit of the American taxpayer, small business owner and accountant, several Representatives were quick to convey their support by signing up as co-sponsors of H.R. 1485. The battery of co-sponsors includes accountants Joe Kolter (D-4-PA), Collin C. Peterson (D-7-MN) and Owen B. Pickett (D-2-VA); House Ways and Means Committee members Sam Gibbons (D-7-FL) and Don Sundquist (R-7-TN); House Ranking Minority Member Andy Ireland (R-10-FL); as well as Dan Burton (R-6-IN), Ronald V. Dellums (D-8-CA), Wayne T. Gilchrest (R-1-MD), Bill Lowery (R-41-CA), David Martin (R-26-NY), Lewis F. Payne, Jr. (D-5-VA) and Bill Zeliff (R-1-NH).

In 1992 Congressman Pannetta has taken his support one step further by urging members of the House Ways and Means Committee to include H.R. 1485 in any forthcoming simplification package. At this early date, it is difficult to determine how the committee members will respond. One thing is certain, their response will be a direct result of your letters and phone calls supporting H.R. 1485.

Under the current system, "small-case" taxpayers who appeal their disputes with the Internal Revenue Service to the Tax Court must incur the added time and expense of finding an attorney to represent them. Thanks to Congressman Panetta, these taxpayers soon may be able to fully resolve their cases with the assistance of the person who knows their situation best -- their CPA or EA.

As you are already aware, the U.S. Tax Court has established separate qualifying rules for attorneys and non-attorneys. Under ttese rules all attorneys qualify for practice simply by being attorneys. Non-attorneys, on the other hand, are required to pass a difficult written examination testing courtroom procedures and knowledge of tax law. The current qualification method for non-attorneys certainly seem simple enough, until you realize that generally fewer than 10% of those who take the test are able to pass it. Further, the exam tests a non-attorney's knowledge of court room procedures which do not apply in small cases before the Tax Court.

Current law prohibits the Tax Court from denying admission to any individual on account of his or her "failure to be a member of any profession or calling." However, this law does not prevent the Tax Court from establishing rules attorneys and non-attorneys. As it currently stands, any attorney may represent a client before the Tax Court whether he/she has knowledge of tax law or not. Conversely, CPAs and EAs who may represent their clients before the Internal Revenue Service under Circular 230 may not represent their client before the Tax Court unless they have exhibited knowledge of formal courtroom procedure.

Unfortunately, it is the claimant who is hurt most by this state of affairs. Claimants are often small business owners or individuals. Typically, small tax court claimants range vastly in educational and technical capabilities. A small tax case claimant may be an engineer, cattle rancher, farmer or a backhoe operator. Obviously, some claimants will fair better than others due to confidence, experience and abilities. However, for the most part small tax case claimants are concerned, apprehensive and illequipped for a technical discussion before the U.S. Tax Court.

It is this same apprehensive claimant who needs the technical expertise of his/her CPA or EA. Claimants, who may operate efficiently and competently within their field of expertise, often flounder when thrown into an unknown arena with their personal finances and the threat of additional penalties and interest on the line. These individuals could greatly benefit from having the option of relying upon a professional to represent their position. Today, small businesses or individuals in a small tax dispute find it increasingly difficult to retain a technically proficient, experienced and interested attorney at a reasonable price. As the claimant's search for cost-effective representation lengthens, so the Tax Court docket continues to stretch.

For the small business owner or individual searching for technically proficient and responsible representation, the answer is H.R. 1485. For the certified public accountant or enrolled agent seeking to represent the client's best interests, including minimizing the accrual of additional interest/penalties to the claimant and who wishes to retain their clients' confidence in the practitioner's professional capabilities, the answer is also H.R. 1485.

The National Society firmly believes that enrolled agents and certified public accountants should have the right to represent their clients before the U.S. Tax Court. They are able to represent taxpayers before the IRS under Treasury Department Circular 230, regardless of the amount of the tax deficiency. Congressman Panetta's bill is a logical extension of these practice rights. Enrolled agents and certified public accountants possess an expertise in taxation which should be fully recognized as more than competent to present the merits of a taxpayer's case.

Most importantly, H.R. 1485 "levels the playing field," in Appeals. If this bill becomes law, an IRS Appeals Officer will know that the small case taxpayer has the option to proceed to Tax Court at a reasonable price. Since the Appeals officer must consider the "hazards" of the government when deciding whether or not to settle a case, H.R. 1485 establishes new procedural safeguards for taxpayers.

The aggressive posture taken by Representative Pannetta is worthy of support and praise. Representative Panneta has proven to be a true champion of the accounting profession, his actions warrant the praise and avid support of the profession. Join your colleagues in the House and private sector in support of H.R. 14985 -- write your Representative today!

The National Society of Public Accountants will continue to aggressively pursue this issue on behalf of its CPA and EA members. If you are a Society member concerned about the future of your profession and the small business community, then we encourage you to support NSPA's efforts by calling your elected representative.

Dorothea Barr is NSPA's Legislative Representative in the Department of Federal Affairs.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:proposed legislation allowing accountants and enrolled agents to represent taxpayers in court
Author:Barr, Dorothea
Publication:The National Public Accountant
Article Type:Cover Story
Date:Mar 1, 1992
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