The Internal Revenue Service (IRS) just couldn’t wait for Congress to pass legislation giving them the authority to regulate unregistered paid tax return preparers. So, on June 26, 2014 the IRS announced a “voluntary” Annual Filing Season Program (AFSP) outlining the new program that focuses on continuing education and filing season readiness for unregistered paid tax return preparers.
The AFSP program will allow unenrolled return preparers to obtain a record of completion when they voluntarily complete a required amount of continuing professional education, including courses in basic tax filing issues and updates, ethics, as well as other federal tax law matters.
According to IRS Commissioner John Koskinen, “This voluntary program will be a step to help protect taxpayers during the 2015 filing season.” However, not everyone agrees with the commissioner. In fact, the AICPA calls the program unlawful and improper.
The following are excerpts from the AICPA’s letter to IRS Commissioner Koskinen explaining the basis for their concern:
I. The IRS must identify a statutory basis for any regulatory approach it creates.
· No statutory authority, including 26 U.S.C. § 7803, authorizes the proposed program.
· If the IRS cannot identify a clear, specific statutory basis for its action, then under the Administrative Procedures Act (APA) it may not act.
II. A purportedly “voluntary” program would be an end-run around Loving vs. IRS.
· The proposed program would also undermine the legal rationale given by the court in striking down the tax return preparer regulations.
· The “voluntary” program would undermine the important concerns underlying Loving.
III. The IRS must comply with procedural requirements.
· The IRS must comply with the APA’s Notice and Comment procedures.
· The IRS must comply with the Paperwork Reduction Act and with Executive Order 12,866 (Regulatory Planning and Review).
IV. The proposal is arbitrary and capricious.
· A voluntary program would not address the problem of unethical or fraudulent tax return preparers.
· A voluntary program could give rise to confusion among consumers.
· The IRS has not sufficiently considered alternative methods of ensuring that tax return preparers are qualified and competent.
For a complete copy of the AICPA’s 14 page letter go to the following website: http://www.aicpa.org/Advocacy/Tax/DownloadableDocuments/AICPA-Letter-to-Comm-Koskinen-June-24-2014.pdf .
I think the IRS is trying to do the right thing, but I believe that they are going about it in the wrong way. I agree with the AICPA that any approach the IRS takes must be supported by a strong legal basis and sound policy. To acquire that legal basis will require congressional intervention; however, Congress probably won’t act until after the next elections.
What do you think?