The IRS initiated a mandatory licensure program in 2011, requiring all tax return preparers, except EAs, CPAs, attorneys and supervised employees thereof, to become a "Registered Tax Return Preparer" (RTRP) by passing a qualifying exam and maintaining 15 hours of continuing professional education in taxation each year.
In January of 2013 this program was shut down by the U.S. District Court in Loving v. IRS. The court decision upheld the plaintiffs' contention that the IRS did not have the authority to regulate tax return preparers. The Service appealed the decision and lost. It decided not to take the case to the Supreme Court, suggesting that it might create a voluntary tax preparation credential.
The Annual Filing Season Program does not issue to participants an actual identifiable credential or designation, like "Registered Tax Return Preparer." Those who meet the program requirements will be issued a "record of completion" certificate and be added to "a database on IRS.gov that will be available by January 2015 to help taxpayers determine return preparer qualifications."
The IRS explains that the database will include information about those who have been awarded a record of completion and "practitioners with recognized credentials and higher levels of qualification and practice rights," such as "attorneys, certified public accountants (CPAs), enrolled agents, enrolled retirement plan agents (ERPAs) and enrolled actuaries who are registered with the IRS."
In order to receive a record of completion currently unenrolled preparers must complete 18 hours of continuing professional education (CPE) classes annually from approved education providers. The CPE must include:
- six hours of a federal tax filing season refresher course,
- two hours of ethics, and
- ten hours of other federal tax law topics.
The program does not require an initial competency test. Participants are, however, required to pass a comprehension test upon completion of the filing season refresher course each year.
For the initial 2015 tax filing season preparers will only need to complete 11 hours of CPE in calendar year 2014, including the full six-hour refresher course and two hours in ethics.
Preparers must also consent to the "duties and restrictions relating to practice before the IRS in subpart B and section 10.51 of Treasury Department Circular Nu. 230" before receiving the record of completion.
Under the new program, only preparers who have been awarded a record of completion "will be permitted to represent taxpayers before the IRS during an examination of a return that they have signed or prepared."
This new program is opposed by the American Institute of Certified Public Accountants and the National Association of Enrolled Agents.
In a letter to Koskinen, the AICPA called the program "arbitrary and capricious because it fails to address the problems presented by unethical tax return preparers who defraud their clients, runs counter to evidence presented to the IRS, and will create market confusion." AICPA feels the Annual Filing Season Program is illegal and has no statutory authorization.
The NAEA says the program "raises significant policy questions as well as significant administrative issues." It wonders what do program participants call themselves and how does the IRS justify awarding limited rights to practice to those who complete and pass the program.
IRS National Taxpayer Advocate Nina Olson also has concerns about the program, because "it does not require preparers to pass a competency test in order to be listed in the IRS database."
Koskinen said the Annual Filing Season Program is temporary, and hopes Congress will eventually give the IRS authority for mandatory oversight of return preparers.
--Written by Robert D. Flach for MainStreet