What’s Next in the World of Tax Preparer Oversight?
The last three weeks have been quite hectic in the world of tax preparer oversight!
It all started last March when three tax preparers filed a lawsuit against the IRS, seeking to end the testing requirements that would require tax return preparers to demonstrate proficiency and remain proficient by taking 15 hours of continuing education courses, with in order to continue preparing and filing tax returns for your clients.
A couple of weeks ago word came that U.S. District Court Judge James E. Boasberg of the DC District Court had ruled in favor of the plaintiffs, stating that, contrary to the IRS’s assertions, the The agency does not have legal powers to regulate individual tax preparers. . The judge ordered the IRS to continue administering tests to certify the proficiency of tax return preparers.
Last week it was announced that the IRS, in conjunction with the Justice Department, had moved to lift the initial injunction, while preparing an appeal to be filed within the next 30 days.
The lead attorney for the tax preparers who filed the suit against the IRS was confident after the initial decision issued by Judge Boasberg was final and unequivocal in its intent to stop the IRS regulation requiring individual tax preparers to take a proficiency test, and expressed confidence that the judge would not retract that decision.
However, on February 1, the judge responded to the IRS motion, along with the Department of Justice, and modified their previous decision. At least for now, the IRS doesn’t have to shut down the tax return preparer registration program, but on the other hand, under the amended decision, the judge made it not mandatory for tax preparers to take the tax return exam. competition and pay the required testing fees to the IRS. Under the judge’s modified decision, preparers can take the test voluntarily and are not required to pay the test fees. However, tax preparers must still request and obtain a registration number, or PIN, from the IRS in order to qualify to file tax returns.
Under the new ruling, the IRS does not have to dismantle the costly and complex program it has already implemented at a cost of millions of dollars, as such steps would have been unnecessary if the present court decision were reversed on appeal.
The IRS has indicated that it will appeal the U.S. District Court’s decision that the agency does not have the power to license the hundreds of thousands of tax preparers who work on preparing individual tax returns, and It alludes to the fact that immediate discontinuation of the tax preparer’s monitoring program would substantially disrupt the tax administration. There has already been a delay in the date to begin filing individual returns, which was moved to January 30. Some returns will not begin processing until later.
In light of the events that have occurred in recent weeks, one thing is certain. The IRS will appeal the court’s decision to suspend the RTRP proficiency tests, and the plaintiffs who filed the initial lawsuit will likely continue to try to deflect the IRS’s intentions to regulate the tax preparation industry.
But judging from the blogged opinions of tax professionals who have already studied and passed the RTRP test, the monitoring program is necessary to curb potential fraud and malpractice, reduce serious errors in tax returns ending harming the taxpayer. , but above all, they aim to have the RTRP certification as a symbol of professional pride and demonstrated competence, which will benefit the tax professional by increasing the confidence of taxpayers in the work of their tax preparer.