Whenever new information is available on the topic of Tax Preparer Licensure, you will find it here first. NATP is dedicated to providing you with important information and developments in legislation that could impact your business.
September 2008 - Anything New on Licensure?You may recall that, in July, we cautioned you not to be fooled by the apparent "calm" in Congress with regard to licensure of tax professionals. There are current bills before both the House (H.R. 5716) and the Senate (S.B. 1219), and some interest remains in their content. We thought we would demonstrate that by calling your attention to a "study" completed by TIGTA (Treasury Inspector General – Tax Administration) on September 3 that was released this past Friday. You may view the entire report here. This report has generated significant interest in the press. Several articles have already appeared in various media. NATP was interviewed by MarketWatch.com on Friday, September 12. You may view the article which appeared on September 14 here. NATP is pleased to support the recommendation coming from TIGTA as a result of this paper. TIGTA recommended that the Commissioner, Small Business/Self-Employed Division, develop and require a single identification number to control and monitor all paid preparers. In other words, TIGTA is recommending that the IRS implement a registration process so that they can follow specific preparers and the quality of their work to determine who needs further training and regulation. The report itself was not statistically sound, as the author stated in Appendix I: "The IRS does not have reliable data to identify the number of unenrolled preparers. Therefore, we could not determine the total population of unenrolled preparers and could not select a statistical sample." Further, TIGTA cautioned that this report should not be used to draw conclusions about all preparers: "Because we selected a non-representative sample of preparers from one large metropolitan city for this review, it is not possible to generalize the results of our work and draw conclusions about all preparers." Despite the candor of TIGTA in its report, the media in general has not been fair in its use of this material. Neither have a number of professional associations. There is an obvious agenda afoot to call attention to the legislation referred to above to regulate paid tax return preparers. As we have consistently stated to you this year, it remains to be seen whether anyone can get the attention of this Congress during the remaining two weeks before it adjourns for electioneering. There is also some talk of a "lame duck" Congress after November 4. We continue to think that the chances for passing this legislation are "thin to none" during the current Congress. There remains a slight possibility that these provisions could be attached to any tax bill or tax portion of an energy bill that may yet make it out of Congress.
July 2008 - LICENSURE...is it still coming?In a word: "Yes." "Well, when?" you ask. Probably sometime during the next Congress. It's not like it couldn't happen yet this year. Certainly a number of lobbying organizations have tried desperately to get existing proposed legislation attached to other tax bills flowing through Congress. As these efforts fail, and time passes, it becomes increasingly unlikely that we'll see a licensure bill this year. The election will overtake the attention of Congress after July. The next Congress will probably be dominated or, at least, very favorably populated by Democrats. Our discussions on the Hill lead us to believe that healthcare reform will overshadow tax reform in the coming Congress. The Joint Committee on Taxation has stated that "Healthcare reform is the biggest fiscal challenge facing the country and likely will push tax reform to the back burner." But don't be fooled by the apparent "calm" in Congress with regard to licensure of tax professionals. Democrats also typically favor more government and regulation. We believe S. 1219 (the "Good Government Act") and HR 5716 (the "Taxpayer Bill of Rights Act of 2008) will be re-introduced in the next Congress. There is definite interest in this measure in both chambers and by both parties. Here are several factors that lead us to believe licensure will become a reality in the next Congress: - The Director of the Office of Professional Responsibility has stated in a few speeches that he's preparing for it because he believes it's inevitable.
- The IRS is hiring and "gearing up" for licensure.
- For the first time, the Congress produced bills in both the House and Senate.
- The White House has included extra funds for the IRS in its budget proposals for this purpose.
- Advisers to Congress (such as ETAAC) have called for this regulation.
- Some legislators are looking at attaching pieces of Congressman Becerra's HR 5716 to tax legislation that yet has a chance of passing this year.
- It's starting to happen at the state level. Maryland, in particular, passed a bill regulating paid individual return preparers. There were efforts in other states.
"What's a licensure law going to look like?" We're pleased to report that there is an awareness that such a measure needs to be carefully thought out and implemented over time. This awareness is on the part of both the IRS and Congress. Any rash moves to enforce licensure quickly could upset the pool of competent preparers that the government relies upon in order to enjoy the current rate of compliance. There will likely be a registration process first and a reasonable transition period to allow preparers to adequately prepare and complete competency testing. Yes, eventually there will be a test and a requirement for continuing education. That only makes sense in terms of raising the bar to increase the average competency level of tax return preparers. That's what licensure is shaping up to look like as we hold discussions with legislators and their staffs today.
Licensure Update - February 8, 2008The IRS Oversight Board recently requested commentary on a variety of topics, one of which was how an effective program could be created to regulate the tax preparation industry at a minimum cost. The IRS states that it has insufficient resources to develop, administer and monitor federal regulation of all tax return preparers. Although NATP was asked to provide testimony on another topic, we thought it important that we also provide commentary on this topic as well. Our paper will be considered by the board as one of its panels discusses and debates this topic on February 19, 2008. We responded to the specific considerations requested by the IRS Oversight Board: The Congress is considering new legislation that would regulate the tax preparation industry, including registration, ethics and competency testing, continuing professional education requirements, public awareness campaign, and an enforcement component. If the legislation passes, how would you recommend that a program be created that is effective, yet revenue neutral, and what impact would increased regulatory fees have upon your clients and taxpayers in general?
We have been in communication with members of the House Ways and Means Committee as well as with members of the Senate Finance Committee concerning Senate Bill 1219 and other similar legislation being considered by some legislators. At present, Congress is too preoccupied with a stimulus package bill to bolster the economy. We also know that this is a "lame duck" session for the current administration. There are some significant tax matters that Congress does want to tackle before they recess and work on the election of the President of the United States. The main focus is on fixing the AMT situation. Currently no one is talking about licensure. That can change in a moment, so we are vigilant. In our ongoing effort to keep members informed on the latest licensure updates, we will be posting our written commentary regarding IRS outreach programs and licensure here following the testimony before the IRS Oversight Board. | 
