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House bill offers fairness to small case claimants.

In this month's column, I would like to focus your attention on a new piece of legislation which was recently introduced to benefit the accounting profession, the small business community and even the U.S. Tax Court.

On March 19, 1991, Congressman Leon Panetta (D-16-CA) introduced H.R. 1485 to provide that certified public accountants and enrolled agents may represent taxpayers in certain 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 the bill, 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."

Under the current system, "small-case" taxpayers who seek to appeal their disputes with the Internal Revenue Service on to the Tax Court are forced to 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 certified public accountant (CPA) or enrolled agent (EA).

Under the U.S. Tax Court's qualifying rules, attorneys automatically qualify for practice simply by being attorneys. Non-attorneys, on the other hand, are required to take a difficult written examination which tests courtroom procedures as well as knowledge of tax law. (Generally, fewer than 10% of those who take the test are able to pass it.) Further still, the exam tests a non-attorney's knowledge of courtroom procedures which are often waived under Section 7463 and are, for all practical purposes, not relevant to the informal intent of these small case proceedings.

Current law prohibits the Tax Court from denying admission to any individual because of his profession, however, this law does not prevent the Tax Court from establishing separate rules for 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, certified public accountants and enrolled agents, who may already represent their clients before the Internal Revenue Service under Circular 230 may not represent their clien 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. Small case Tax Court claimants are often small business owners or individuals from a wide range of educational and technical backgrounds. The typical claimant may be an engineer or a farmer, a consultant or a backhoe operator. Highly skilled in their own fields, they are nevertheless understandably concerned, apprehensive and ill-equipped for a technical discussion before the U.S. Tax Court. Clearly these taxpayers need the technical expertise of their CPA or EA and would benefit greatly 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, 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. And, for the certified public accountant or enrolled agent seeking to represent the client's best interest, minimize the accrual of additional interest and penalties to the claimant and maintain confidence in the practitioner's professional capabilities, the answer is H.R. 1485.

Similar legislative initiatives have been actively promoted in previous years. In fact, similar legislation was adopted by the U.S. House of Representatives as part of H.R. 3838, the Tax Reform Act of 1986, and H.R. 4170, the Tax Reform Act of 1984. In both instances, however, it was removed from the final bill by House-Senate Conference committees.

However, 1991 provides somewhat of a unique twist for this legislative proposal. First and foremost, the U.S. Tax Court is undergoing significant strain from docket backlog and overload which has even raised eyebrows at the House Ways and Means Committee. While H.R. 1485 will not eliminate the growing docket altogether, it does offer a quick and efficient alternative to alleviate the backlog of small tax court cases.

Second, congressional leaders have repeatedly staed that there will not be a major tax bill this year. Instead, the House Ways and Means Committee will be reviewing, through a series of upcoming hearings, a plethora of viable tax simplification measures. H.R. 1485 represents the epitome of a true simplification measure, one which simply derives its result at "no-cost" to the taxpayers.

Third, there is strength in numbers. National representatives of the small business community are currently reviewing this legislation for support, particularly as small businesses are having a difficult time retaining cost-effective counsel to represent them before the U.S. Tax Court. H.R. 1485 would enable a CPA or enrolled agent already familiar with the client's case to reduce the claimant's need for continuances and the inevitable accrual of interest and penalties. In fact, Ron Frano, president of the American Small Business Association, representing approximately 150,000 small businesses, has already pledged that organization's support for H.R. 1485 and has joined with NSPA to work for its passage. Other small business leaders considering support are the U.S. Chamber of Commerce, the National Federation of Independent Business and the Small Business Legislative Council.

Similarly, within the ranks of the accounting profession, the AICPA has referred this issue to a special committee for review and consideration, Additionally, the National Association of Enrolled Agents has already gone on record in support of Congressman Panetta's initiative.

In light of Congress' current interest in tax simplification, Society representatives believe that the strength of the small business community combined with that of a united profession will establish a solid foundation from which H.R. 1485 can be aggressively promoted. The cultivation of such well-rounded strength should draw the congressional recognition and support which H.R. 1485 needs to ensure passage.

NSPA 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, no matter how high the tax deficiency. Congressman Panetta's bill is a logical extension of these practice rights. Enrolled agents and CPAs posses an expertise in taxation which should be fully recognized.

NSPA will continue to aggressively pursue this issue on behalf of its CPA and EA members. If you are a concerned Society member interested in the direction of your profession and the small business community which it serves, then support NSPA's efforts by calling your elected representative. Passage of H.R. 1485 could be just a phone call away!
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No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:bill allowing certified public accountants and enrolled agents to represent taxpayers in certain Tax Court cases involving $10,000 or less
Author:Barr, Dorothea
Publication:The National Public Accountant
Article Type:column
Date:May 1, 1991
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