From the NSAlert: December 20, 2013
As we reported in September, individuals who attended the appeals court hearing in the Loving case were virtually unanimous in their opinion that the IRS was poorly represented at the hearing and expect the IRS to lose the case. Result: no authority to regulate preparers other than CPAs, attorneys, or EAs.
The tax writers on Capitol Hill have taken notice and believe the IRS should
have the authority to regulate the unregulated—let’s call them RTRPs—and have begun meeting with interested parties to craft a legislative solution. That solution is not necessarily the status quo before Loving, so NSA was invited to weigh in on a legislative solution with the understanding that the solution envisioned on Capitol Hill would involve a test and mandatory CPE.
NSA pointed out that the regulatory scheme, crafted by the IRS, exempted from testing individuals who had taken and passed an examination recognized for regulatory purposes by a state, i.e., certified public accountants and attorneys, because passage of the state approved examination was assumed to demonstrate, at the very least, minimum tax competency. However, the IRS did not exempt
from this new testing requirement other individuals who had taken and passed a state-recognized examination that demonstrated competency in tax matters. For example, the IRS required individuals who had passed either the tax preparer or tax consultant examinations given by the state of Oregon to also pass the IRS competency examination. Similarly, the IRS required individuals to take the competency examination even if they had taken and passed the test in taxation offered by the Accreditation Council for Accountancy and Taxation (ACAT) which is recognized to demonstrate competency for regulatory purposes in various states, including Delaware, Iowa, and Minnesota.
Accordingly, NSA strongly recommended that any legislation requiring federal tax return preparers to demonstrate competency in tax matters should provide that (1) such competency is shown if an individual passes an examination accepted by any state as evidence of competency; and (2) such individuals should be exempt from any IRS test. In short, those who have taken and passed an ACAT examination or those who have taken and passed the Oregon tax exam should be exempt from IRS testing
Executive Vice President
National Society of Accountants