To provide some background for the "laity", during 2009, the Internal Revenue Service announced, by administrative fiat and effective with Tax Year 2010, that any person not holding State licensure as a CPA or holding IRS recognition as an Enrolled Agent and preparing Federal Tax Returns for compensation - a Preparer, would be required to not only pass a proficiency exam, but also take 15 hours of annual Continuing Education as well as pay an annual fee ($63) to maintain a preparers ID number (PTIN). CPA's were exempt form the exam and education requirement as, from having "been there done that", the exam is "tough, but not impossible" (I "gave up everything but work" to study and take a review course for seven months before "sitting" during 1973) and, while varying between the States, Illinois requires 120 hours of continuing education during each 3 year licensing cycle. EA's have what I understand is a "tough" exam and have a 30hr annual continuing education requirement.
The licensing of CPA's is a State matter and governed by enacted State legislation and hence, aside from automatic granting of EA status with the IRS, beyond the scope of a Federal agency. EA's are controlled by IRS administration, but there is no requirement that one hold that status to prepare Returns for compensation.
But apparently a Court, when granting the Injunction noted in the linked material decided that for the IRS to impose by administrative fiat that a Preparer take an exam and continuing education exceeded their administrative authority and if such were to be the case, there would need be enacted legislation to delineate such. However, to require a Preparer to obtain an ID number and to pay a user fee for such was deemed within their scope, as IRC Sec 7528 permits imposition of user fees where specific services for benefit of a person, real or fictitious, are rendered.
As for myself, I am "split". If I am to put on my "pro bono publico" hat, I think there should be some kind of mandated educational requirement of anyone who is a Preparer. In over thirty years of practice, I've seen too much "garbage" that constituted a Tax Return, and have spent much uncompensated time "fixing up the f^&#ups'. However for myself, I retired from licensed practice as a CPA during 2003 and surrendered my license. Since then, I have maintained an "accommodation practice" now down to six clients who have been with me not less than twenty years, "don't cause trouble", and I consider personal friends. When I announced my retirement to the clientele with six months notice, it was "I'm done". However, I started to think twice when I realized this was causing personal anxiety amongst several (try a "little old lady" who had been with me since 1982 phoning me up at midnight crying) and continued and clearly stating I no longer have any standing as a CPA (the title is mine for life).
I guess what I'd like to see is enacted legislation requiring anyone, be they self employed, partner, or an employee, preparing, say, ten or more Returns per year and soliciting business from the public, to meet educational and proficiency requirements; yet exempting those, i.e. me, who fall below those criteria.
We shall see, but I figured those here who "love" government would be delighted to learn of this tale.
Posts: 9987 | From: Clarendon Hills, IL USA (BNSF Chicago Sub MP 18.71) | Registered: Apr 2002
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How about something simple. A piece of paper stating you are a qualified, IRS trained CPA, or you are not an IRS trained CPA. Let the citizens decide if they want to use your CPA services.
I have the same thoughts on smoking in a private business. A sign on the door should warn folks if smoking is allowed or not allowed inside; and that should be the total involvement for the government in a private business, regarding smoking.
Posts: 1418 | From: Houston, Republic of Texas | Registered: Jan 2001
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Mr. Smith, let it be understood that I am no longer a CPA beyond its use as an honorary title.
I've been in post-retirement practice for now ten years and am not seeking or accepting any additional clients. The clients that remain have full confidence that I will deliver them Returns and Financial Statements (two such are corporations; Financial Statements to support a Corporation Return are required by law) in which 2+2 make 4 and that I keep abreast of any tax matters affecting them.
So far as "IRS trained CPA", the IRS does not train any Preparer. To attain a CPA, one must have an undergraduate degree and which includes some 32 hours of Accounting related credits (those holding Liberal Arts degrees will have to do some kind of post-graduate study) and pass the exam, which is uniform as it is prepared by the AICPA, but yet graded at State level. In order to be licensed in Illinois, you must work for a CPA for one year. In my case, while I attained my CPA certificate while with the MILW for simply a "ticket" to show 'em I wanted to move up, it was just that - a certificate. When I left at end of 1981 and went into private practice, I bought out a retiring practitioner and the condition was that he would hang around with his license in good standing for a year and, presuming I met the standard of "good moral character" and competence, he would sign off that I had been employed by him, which in fact I was. That is how you become a licensed CPA - nothing whatever to do with the IRS, beyond that they will automatically enroll any licensed CPA as an Enrolled Agent without having to take their separate exam.
Hopefully I've clarified a point or two.
Posts: 9987 | From: Clarendon Hills, IL USA (BNSF Chicago Sub MP 18.71) | Registered: Apr 2002
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You did clarify a number of points, but it still comes down to a sign, and letting the customer decide.
Posts: 1418 | From: Houston, Republic of Texas | Registered: Jan 2001
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