No! Bad IRS!

The IRS has caved to pressure from CPA and larger practices and have decided to exempt non-signing preparers from the new testing and continuing ed requirements(CPE). According to Notice 2011-6, a non-signing preparer who's work is supervised by and returns signed by a practitioner who is covered by Circular 230 does not have to be tested and do the CPE. They will have to get a PTIN and they will be subjected to the tax and background tests.

I have two issues with this decision. First, since CPAs are not subject to the testing, how does the IRS know they are qualified? Yes, they have had some tax training but can they pass the test(s)?( My evil twin would like the see the IRS test the proposed test(s) at the next AICPA conference. No warning, just herd them all into a room, give them a pencil, test book, answer sheet and a few sheets of paper for scratch computations and see how well they really do.) My second issue is the  supervisory question. I am sure there are firms with serious documentation and review procedures in place. The CPA signer makes sure the return is correct. But how many firms just give the returns a look over, especially the easy(?) parts, and slap a signature on the return. After all they can charge more if the CPA signs the return than if the intern does.

The logic has been that the signer takes the responsibility for any problems. What what about the mistakes that don't cause any problems the IRS/taxpayer sees? Times when the non-signing preparer doesn't give the taxpayer a deduction or credit they are entitled to. The mis-interpret the facts or requirements. The signer won't see the problem if they are not extensive notes (paper trail), the IRS won't catch this problem but the taxpayer pays more in tax.

I really think the IRS has dropped the ball on this. The preparers now getting PTINs have until 2013 to be tested. Hopefully, by then the IRS will reverse themselves or put in some procedures that will protect taxpayers by ensuring proper supervision.

My previous post on this topic is here.

Comments

[IRS Hitman]

Trish, enjoying your commentary on the IRS system. I'll keep on reading your thoughts! (And share a few on my blog, too!)