Robert J. Fedor, Esq., L.L.C.

IRS' attempts to regulate independent tax preparers come under fire

We've previously reported about unscrupulous tax preparers who take advantage of clients and commit tax crimes. In an effort to weed out these dubious tax preparers, the Internal Revenue Service recently established a new program called the Annual Filing Season Program. The IRS contends that participation in the program is voluntary. Independent tax preparers who participate will "obtain 18 hours of continuing education," and their names will be included in the IRS' Directory of Federal Tax Return Preparers with Credentials and Select Qualifications, which will appear on the agency's website.

The establishment of the AFSP has become a hot-button issue among independent tax preparers who previously filed a lawsuit against the IRS related to the agency's constitutional ability to establish such a program. Earlier this year, an appellate court sided with the independent tax preparers and ruled the IRS "did not have the legal right to regulate tax preparers. However, despite this ruling, the IRS recently announced the launch of the agency's voluntary AFSP.

More recently concerns over the legality and general effectiveness of the program were raised by members of the American Institute of CPAs. In its lawsuit, AICPA not only questions whether the IRS has the authority to establish such a program, but also raises major concerns related to the agency's actions in ignoring the most-recent appellate court decision by choosing to still establish the AFSP, but define participation in the program as being voluntary.

The AICPA argues that by establishing the AFSP, the IRS assumed authority that can only be granted by Congress. Furthermore, the AICPA claims the IRS failed to comply with procedural rules that require a "notice and comment period" as pursuant to the Administrative Procedure Act. Additionally, independent tax preparers who fail to participate in the AFSP will effectively lose out on business, therefore making the IRS' claims that participation in the program is voluntary invalid.

Individuals, who have been the victim of an independent tax preparer’s tax crimes, would be wise to seek legal advice. Even in cases where an individual wasn't aware of a tax preparer's plans or actions, he or she can be held accountable and may face criminal charges. 

Source: Forbes, "AICPA Files Lawsuit Against IRS To Stop New Tax Preparer Program," Kelly Phillips Erb, July 15, 2014

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