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IRS to consider commercial preparer registration.

IRS to Consider Commercial Preparer Registration

At the December meeting of the IRS Commissioners' Advisory Group (CAG), a subcommittee report of great interest to all NSPA members was approved by the group and submitted to Commissioner Fred T. Goldberg, Jr., for his consideration. This report recommended the registration of commercial return preparers.

NSPA was asked to present its views to the CAG Commercial Preparer Subgroup during the deliberative process. Consistent with longstanding NSPA policy, the National Society's comments endorsed the concept of registration within certain well-defined parameters.

First and foremost, NSPA distinguished "registration" from "licensing". To the National Society, the latter term connotes some form of pre-approval demonstration of qualification. In NSPA's view, such a requirement would be both unworkable and unwarranted. The IRS clearly lacks the resources necessary to adequately administer such a complex proposal. Moreover, the asserted benefits to be derived from a registration program, many of which will be enumerated shortly, remain unpersuasive when measured against the burdens of licensing. When weighed against a more modest registration requirement, the scales would appear to tip in favor of the proposal.

There is also a good deal of confusion surrounding the term "commercial return preparer" itself. Clearly, the term would appear to exclude those already licensed to practice before the Internal Revenue Service--attorneys, certified public accountants and enrolled agents. This exclusion still leaves a broad range of practitioners unaccounted for--public accountants, licensed public accountants and accounting practitioners to name a few.

In order to resolve this dilemma, NSPA, and ultimately the CAG, resolved that the registration proposal ought to apply to all those not currently authorized to practice before the Treasury. Again, when one considers the benefits of registration, the advantages of this treatment become apparent.

Having defined, perhaps by default, exactly what it consideres registration to entail, the National Society went on to outline the reasons it supports a registration program. Reiterating NSPA's policy position, the Society asserted that American taxpayers must be protected from incompetent and irresponsible return preparers. The registration process is viewed by NSPA as a singularly appropriate and effective means for achieving that end. The Society's communications with the CAG Commercial Preparer Subcommittee went on to reiterate the profession's support for such a process.

In its final report to the commissioner, the CAG enchoed many of these sentiments. Noting that nearly half of all individual returns are filed by paid preparers, the CAG report concluded that the regulation of commercial return preparers "has the potential of resulting in improved tax returns."

The CAG thus perceived a definite connection between registration and compliance. It went on to indicate that registration would facilitate the disciplinary process in those situations where preparers engage in misconduct or are not competent in the preparation of tax returns. Finally, the CAG indicated that registration would help the IRS to "define its universe," thereby facilitating comunication and outreach.

These are all laudable goals, and it would be most irresponsible for any professional tax society to publicly oppose them, absent compellint justifications. NSPA cannot perceive such a justification.

It should be noted, however, that the decision by the CAG to recommend registration to the commissioner was by no means unanimous. There were several vociferous dissenters amongst the CAG's ranks. In fact, the CAG report included an important list of disadvantages which potentially may flow from a registration program. Concerns over the administrative burden, the public perception of further government control over peoples' lives, and the potential for limiting the number of available prepares have all been offered as reasons to eschew registration. Perhaps the most cogent argument in opposition to the proposal, however, focuses on the fact that registration may connote to taxpayers some form of compiled government endorsement of, or worse, complicity with, return prepares.

The CAG concluded its report by acknowledging the potential disadvantages of registration but asserting that the reasons supporting the concept outweigh those against, particularly in light of the "tax gap" (the amount of taxes unreported and unpaid) and the increasing complexity of the tax law. This conclusions is consistent with, and therefore must be supported by, NSPA policy.

To the extent that one feels compelled to view the registration program as "targeted" toward a specific segment of the tax practitioner community (and it cannot be emphasized enough that this is a gross oversimplification), the average NSPA member should have nothing to fear from the proposal. NSPA members are already governed by a Code of Professional Conduct, and the abuses and incompetencies alluded to above are certainly not attributable to virtually all NSOa members. Any deleterious effect on the average NSPA member is simply not apparent.

Rather, an opposite result well may prove to be the case. A strong argument can be made that the NSPA member will only gain from a registration program. The overall reputation of the profession is likely to be improved as a result. "Fly-by-night" competitors may cease to be a problem. Communication with the IRS might even the easier. The positive aspects of the CAG proposal are indeed compelling.

The tax business is not getting any easier. No one knows this better than NSPa members. NSPA members work hard to maintain their fluency in what is a very fluid environment. Those tax practitioners who do not share this commitment to high standards of professional conduct and technical expertise do the entire tax community a grace disservice. Registration would go a long way toward remedying this injustice.

It cannot be known what action, if any, the commissioner will take on the CAG recommendation, nor is there any timetable contemplated for such a decision. Meanwhile, NSPA members can rest assured that the National Society will continue to monitor closely this sensitive issue, seeking at every possible juncture to preserve and promote the integrity of the profession.
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Title Annotation:Internal Revenue Service
Author:Berkery, Peter M.
Publication:The National Public Accountant
Article Type:column
Date:Mar 1, 1990
Previous Article:The AICPA/NASBA proposed agreement on oversight review - another perspective.
Next Article:Section 469 - "activity defined." (rules for taxpayers with multiple operations)

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