CPAs Endorse Bipartisan Push to Regulate Tax Return Preparers

WASHINGTON – A bipartisan bill aimed at increasing oversight for paid tax return preparers has garnered the support of the American Institute of CPAs.

The bill, the Taxpayer Protection and Preparer Proficiency Act, was introduced last month by Rep. Jimmy Panetta, D-Calif., and Tom Rice, R-S.C.

Among other things, the bill would give the Treasury Department authority to regulate paid tax return preparers, would give the IRS authority to revoke an incompetent or fraudulent preparer’s Preparer Tax Identification Number, and would clarify that certain non-signing preparers — those preparing returns under the supervision of an attorney or COP — are not required to obtain a PTIN.

The bill also requires the Government Accountability Office to conduct a study or information sharing between the Treasury Department and state authorities regarding both PTINs and minimum standards for preparers.

Currently, no minimum federal competency standards for tax preparers exist. Tax preparers have no obligation to receive tax education, training, or competency requirements in tax return preparation, leaving families and individuals who rely on these services at risk.

Due to that deficiency, the IRS receives tens of thousands of complaints per year regarding insufficient services. While tax preparers may be prosecuted for fraud, current precedent bars prosecution for incompetence.

“Mistakes by incompetent tax preparers have led to many taxpayers getting audited or penalized through no fault of their own,” Panetta said. “My bipartisan legislation will help prevent such predicaments by allowing the IRS to regulate paid tax preparers and ensure that they are meeting minimum competency standards. Anybody who pays for their taxes to be prepared deserves to know that their tax preparers are professional, proficient, and principled and, if not, will be held accountable by the IRS.”

“The Taxpayer Protection and Preparer Proficiency Act will reduce error rates, lower risks for taxpayers, and help put a stop to the use of unqualified tax preparers,” Rice said. “Since the federal government dictates our obligation to file taxes, we ought to allow the IRS to ensure that those to whom taxpayers turn to for assistance are well qualified.”

The bill received the endorsement of the AICPA on Thursday.

“Ensuring that tax preparers are competent and ethical, and that the IRS has the tools it needs to conduct appropriate oversight, is critical to maintaining taxpayer confidence in our tax system and protecting the interests of the American taxpayer,”said Edwad Karl, the organization’s vice president.