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NSAlert: Tax
Preparer Regulation Issue
July 30, 2009:
NSA Testifies on Tax Preparer Regulation at IRS
Forum
National Society
of Accountants Model Bill on Tax Preparer
Registration
I
Am Their Leader – Which Way Did They Go?: IRS
Says Commissioner Did Not Authorize RFP on
Self-Regulatory Organization for Tax Preparer
Oversight
NSAlert readers
are aware that IRS Commissioner Shulman on June
4 announced a major IRS initiative to increase
tax preparer compliance involving a new model of
regulation, saying he planned to have "a
transparent and open dialogue" about the issues.
Testifying before the House Ways and Means
Committee Oversight Subcommittee, Shulman said
he wanted to enter the process for reviewing
preparers "with an open mind" and refused to
"prejudge" what his recommendations for
standards for the industry might be.
What then to make
of an IRS request for a proposal to create a
self-regulatory organization (SRO) to oversee
tax preparers and software developers?
The June 8 IRS
task order requested proposals for design of a
self-regulatory agency, with oversight and
authority to "create, amend, implement, and
enforce quality and conduct standards," for tax
preparers as well as software providers. The
statement of objectives (SOO), which apparently
went to five companies—Deloitte LLP,
PricewaterhouseCoopers, Grant Thornton LLP, IBM,
and Booz Allen Hamilton, asked for the proposals
to be submitted to IRS by June 16. The SOO
specifically told the firms to consider current
models for SROs, such as the Financial Industry
Regulatory Authority. It should be noted that,
prior to his appointment at IRS, Shulman was the
vice chairman of FINRA, a self regulatory body
that oversees nearly 5,000 brokerage firms.
Not so fast,
according to Frank Keith, IRS communications and
liaison chief. "The procurement vehicle was in
error and we are going to withdraw it. The
commissioner was not aware of the procurement,
and all options are still on the table."
Administration Proposes
More Required E-Filing By Preparers
The Administration’s budget for FY 2010
contains a provision that could lead to more
required e-filing by tax return preparers. The
proposal, which would be effective for calendar
year 2011 returns if adopted, is as follows:
Current Law The Department of the Treasury
currently may issue regulations regarding when
tax returns must be filed electronically on
magnetic media or in other machine-readable
form. But the regulations may not require
individuals, estates, or trusts to file their
tax returns electronically. In addition, the
regulations may not require any person to file
electronically unless the person files at least
250 tax returns during the calendar year.
Reasons for
Change:
Electronic filing benefits taxpayers and the IRS
because it decreases processing errors,
expedites processing and payment of tax refunds,
and allows the IRS to efficiently maintain
up-to-date taxpayer records.
Proposal The proposal generally would maintain
the current rule that regulations may not
require any person to file electronically unless
the person files at least 250 tax returns during
the calendar year. But the proposal also would
provide an exception to this rule under which
regulations may require electronic filing by tax
return preparers (as currently defined in the
Internal Revenue Code) who file more than 100
tax returns in a calendar year. The proposal
also would allow regulations requiring tax
return preparers who file more than 100 returns
(or any other person who files more than 250
returns) to file electronically tax returns for
individuals, estates, or trusts.
The proposal would be effective for tax returns
required to be filed after December 31, 2010.
Allow us to
summarize: the regulations may not require
e-filing unless a person files at least 250 tax
returns per year, in which case the regulations
may require e-filing by a tax return prepare who
files more than 100 tax returns per year. Got
it?
This provision appears on
page 106 of the General Explanation of the
Administration’s Fiscal Year 2010 Revenue
Proposals, a complete copy of which you may find
at the following weblink: http://www.treas.gov/offices/tax-policy/library/grnbk09.pdf
2009 State Bills
Did you ever wonder what your officers and
committees were doing while you were preparing
tax returns? Not that those officers and
committee members did not also have tax returns
they were preparing for clients. Well, to give
you just a glimpse, the attached table gives
you a sample of some of the state
legislative efforts just one of your committees
was following during tax season. By "following"
we mean not just reading about it, but actively
participating in some cases with legislators as
they debate your well-being, whether your
are a CPA, attorney, EA, ACAT credential holder
or are just working on your first credential.
IRS 941 Forms & The Stimulus Act
The stimulus bill
- technically the American Recovery and
Reinvestment Act of 2009 - bill provides a 65%
subsidy for COBRA continuation premiums for up
to 9 months for workers who have been
involuntarily terminated, and for their
families. To qualify for premium assistance, a
worker must be involuntarily terminated between
September 1, 2008 and December 31, 2009.
The subsidy would terminate upon offer of any
new employer-sponsored health care coverage or
Medicare eligibility. Workers who were
involuntarily terminated between September 1,
2008 and enactment, but failed to initially
elect COBRA because it was unaffordable (note:
how is that determination made?), would be given
an additional 60 days to elect COBRA and receive
the subsidy. The employer is reimbursed for the
cost of the subsidy by treating the amount that
is reimbursable to the entity as a credit
against its liability for payroll taxes (if this
amount is insufficient, IRS or Treasury will
directly reimburse the employer).
The IRS released a revised Form 941 so that
employers can properly report their employment
tax liabilities under the new law. A copy of the
new Form 941, 941ss and instructions can be
found below:
Form 941
Form 941ss
Form 941
Instructions
Amendments to Circular 230 Made Final; 'Limited
Practice Rights' Retained
The Treasury
Department on Tuesday, September 25 issued final
rules making amendments to Circular 230. NSA
Members will recall that proposed rules had been
issued on February 8, 2006. NSA is pleased that
the Treasury Department has agreed with our
objection to the proposal to do away with the
so-called "limit practice rights" for those
individuals who prepared a return. Under the
proposal, these individuals, who are not
otherwise covered by Circular 230 because they
are not attorneys, CPAs, EAs or PAs, could not
even respond to IRS questions about a return
they had prepared. This provision has not been
retained in the final rules and we applaud
Treasury for heeding the advice of practitioners
to drop this rule. To quote the Treasury: "the
authorization in §10.7(c)(viii), which allows an
individual, who was not otherwise a
practitioner, to represent a taxpayer during an
examination if that individual prepared the
return for the taxable period under examination,
is retained. An unenrolled return preparer who
prepared the taxpayer's return for the year
under examination, therefore, may continue to
negotiate with the IRS on behalf of that
taxpayer during an examination or bind that
taxpayer to a position during an examination."
Click here for a copy of the
regulation.
NSA
Urges Senate to Ban Tax Strategy Patents
NSA praised the U.S. House of Representatives
for passing H.R. 1980, the Patent Reform Act of
2007, which includes a section that would
prohibit patents on tax strategies, which are
allowed under current law, and urged the Senate
to act promptly on this matter as well. |
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