Getting it right

Posted by Bruce Mc on Jul 6, 2009 in Choosing a preparer, Opinions, Preparer | 0 comments

            Five days ago I read a post on a topic that is of interest to everyone. The author of course responded to my comment. AN up and coming CPA/tax blogger gave a note where, of course, the author responded, and I put in another two cents worth. At this point, a new voice entered with a statement and some questions. 

          I hope now to answer those questions, and maybe a few others. 

          This all started simply enough because of a 2003 Study.  Findings were such that CPA Prepared Returns Result in Fewer Audit Adjustments than Returns Prepared by Non-CPAs 

          I made the comment that maybe this study was not entirely accurate. Not because of the study itself, but because taxpayers blindly believe that a person with CPA behind their name means they are tax preparation experts. 

          For the record, just so you know, just because somebody has CPA behind their name, this does not make them a “tax professional”. 

           In a post from another tax blogger, she was thinking about all the fancy credentials the AICPA offers for CPAs to specialize – financial planning, fraud examination, business valuation – and wondered how to become a certified tax expert. A representative of the AICPA (American Institute of Certified Public Accountants) responded to this saying, “We do not offer a credential in taxation. In general, our approach has been not to develop credential programs around areas for which the public already believes CPAs to ‘own’.” 

          As I read this I was amazed that someone representing the AICPA actually admitted that the general taxpaying public blindly believes that just because someone is a CPA they own the title of tax professional. 

           Again, A CPA designation does not by itself qualify as tax expert. Other than EA (Enrolled Agent), there is no real designation available to be obtained to verify or prove a Tax Preparation Professional.  There needs to be. 

             I suggested then that we needed to educate taxpayers in the difference of just a CPA and a tax professional (who by the way could be a CPA). 

             As it was pointed out to me, who would pay for this, who should or would be charged with this responsibility?

             The comment that sparked this post – “I think the industry should accept that it has taken certain missteps along the way and repair that. . .”

              In an annual report by National Taxpayer Advocate, Nina Olson said that she would work with the Inspector General for Tax Administration to develop regulations for presently unregulated (commercial preparers who are not attorneys, CPAs or enrolled agents) tax preparers.

              To me this is misleading. I mean it is being proposed that those who are not attorneys, CPAs or enrolled agents aren’t regulated. When in fact they are governed by the same rules as those  preparers as who are attorneys, CPAs and enrolled agents. (We are talking about what is commonly referred to as an un-enrolled preparer.) 

            So to clarify, According to Circular 230 (Circular 230 contains the regulations governing the practice of attorneys, certified public accountants, enrolled agents, enrolled actuaries, and appraisers before the IRS.) a preparer is defined as “An individual who prepares and signs a taxpayer’s tax return as the preparer, or who prepares a tax return” And preparers are governed by the regulations described in Circular 230, including ethics.  

            If you are an Attorney, CPA, EA you are afforded more mobility within the IRS to act on a taxpayers behalf as also described and regulated by Circular 230.

             As it stands right now, anyone can claim to be a tax preparer. There are no guideline as to education requirements, or continuing education requirements. This concerns people, as it should.

             I am considered an un-enrolled preparer. By all means I am all for a change. Somewhere somehow there needs to be some sort of something, be it college education and designation or Federal licensing. There needs to be something. To assume this needs to only be done for un-enrolled preparers is pompous.

             Any preparer, whether you are un-enrolled, a CPA, an Attorney, and EA, whatever they are, there needs to be something for everyone who signs as a preparer. A standard for all who assist taxpayers in the preparation of their return.