According to the IRS, 62% of individuals who currently have a PTIN are not otherwise credentialed, meaning that there is no oversight, regulatory body or authority where individual taxpayers can file a complaint if desired.

The proposed legislation to rectify the regulation of tax return preparer is S.1192/H.R.3330, “The Taxpayer Protection and Preparer Proficiency Act of 2019.” Back in 2010, the Internal Revenue Service announced that it would be regulating tax return preparers. This was challenged in the case of Loving v. IRS, in which the IRS lost by summary judgement, which was then appealed in the D.C. Court of Appeals, and then denied. Once the appeal was denied, then IRS Commissioner John Koskinen stated that the IRS would wait for Congress to enact legislation. The current legislation, if passed, would give the U.S. Department of the Treasury, and subsequently, the IRS the authority to regulate tax preparers. This legislation has support from members of both political parties in the Senate and House of Representatives, as well as from our organization, The National Conference of CPA Practitioners (NCCPAP).

In the case of S.1192/H.R.3330, this legislation could not be timelier. Currently, anyone can start a business claiming that they prepare income tax returns for individuals and businesses. All that is required is for that individual to obtain a Preparer Tax Identification Number (PTIN) from the IRS; however, no one checks their level of competency. When the IRS had attempted to regulate tax preparers unilaterally, they were requiring those who were not a CPA, EA, or Attorney to: (1) pass a minimum competency exam; and (2) take continuing education courses to maintain their knowledge of current tax law. The exam was a one-time event, and continuing education courses is something that all CPAs, EAs and Attorneys must do on an annual basis, as required by their certification bodies.

With all that has occurred with regard to the COVID-19 pandemic, NCCPAP feels that individuals and businesses who engage a tax return preparer, need to have confidence that those they engage are both competent and current. In addition, federal and state governments, which rely on tax revenues to operate and provide services, should support this legislation so that no one is claiming any deductions for which they are not eligible. Unfortunately, there will always be fraudulent tax returns prepared and submitted. Fortunately, the IRS and state taxing authorities are catching up with the criminals and reducing the amount of fraudulent refunds, both in quantity and amounts paid. The proposed legislation will greatly help in this fight against fraud.

The National Conference of CPA Practitioners (NCCPAP) endorses S.1192/H.R.3330 and in the strongest possible terms requests that it be passed on its own or incorporated into any future legislation being considered.

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As the month of July comes to a close, there are several aspects of the CARES Act, that are scheduled to end, which will impact both businesses and individuals. Currently, Congress is busy working on additional legislation that would assist those businesses and individuals who are still affected by the pandemic.

As this legislation is being discussed, there are two issues that NCCPAP would like to bring to the attention of Congress for immediate consideration for this pending legislation. When the CARES Act was originally written, there were several portions of it that were ambiguous and subject to interpretation. With regard to the Paycheck Protection Program (PPP), established by Section 1102 of the CARES Act, the original intent of Congress was for any funds used under this program, and subsequently forgiven, to be treated as deductible expenses of the business. However, the Internal Revenue Service, misinterpreting Section 1106 of the Act which states that any monies received under PPP “shall be excluded from gross income” by reason of forgiveness, concluded that the expenses be excluded from business deductions for income tax purposes. This ruling is in direct contrast to the intent of Congress.

On May 5, 2020, Senator John Cornyn of Texas introduced S.3612, “Small Business Protection Act of 2020”. This bill specifically states that “no deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income.” The legislation, if passed, would overturn the ruling issued by the IRS under Notice 2020-32. This has a direct impact on all businesses. Furthermore, if the business is an S Corporation, Partnership, or Sole Proprietorship, the individual taxpayers would also be affected. As of this time, this legislation has bi-partisan sponsorship, and the number of sponsors is growing.

The National Conference of CPA Practitioners (NCCPAP) endorses S.3612 and in the strongest possible terms requests that it be passed on its own or, at a minimum, incorporated into any future legislation being considered. In addition, NCCPAP supports adding automatic PPP loan forgiveness for any loan amount under $150,000 to any future legislation.

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NCCPAP has released their monthly IRS update. Highlighted topics include Economic Impact Payments, Nationwide Tax Forums, Pension Plans & COVID-19, Small Business/Self-Employed Division, and Qualified Business Income Deduction. Learn more in the post below.

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