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I Am Their Leader – Which Way Did They Go?: IRS Says Commissioner Did Not Authorize RFP on Self-Regulatory Organization for Tax Preparer Oversight
NSAlert readers are aware that IRS Commissioner Shulman on June 4 announced a major IRS initiative to increase tax preparer compliance involving a new model of regulation, saying he planned to have "a transparent and open dialogue" about the issues. Testifying before the House Ways and Means Committee Oversight Subcommittee, Shulman said he wanted to enter the process for reviewing preparers "with an open mind" and refused to "prejudge" what his recommendations for standards for the industry might be.
What then to make of an IRS request for a proposal to create a self-regulatory organization (SRO) to oversee tax preparers and software developers?
The June 8 IRS task order requested proposals for design of a self-regulatory agency, with oversight and authority to "create, amend, implement, and enforce quality and conduct standards," for tax preparers as well as software providers. The statement of objectives (SOO), which apparently went to five companies—Deloitte LLP, PricewaterhouseCoopers, Grant Thornton LLP, IBM, and Booz Allen Hamilton, asked for the proposals to be submitted to IRS by June 16. The SOO specifically told the firms to consider current models for SROs, such as the Financial Industry Regulatory Authority. It should be noted that, prior to his appointment at IRS, Shulman was the vice chairman of FINRA, a self regulatory body that oversees nearly 5,000 brokerage firms.
Not so fast, according to Frank Keith, IRS communications and liaison chief. "The procurement vehicle was in error and we are going to withdraw it. The commissioner was not aware of the procurement, and all options are still on the table."
Administration Proposes More Required E-Filing By Preparers
The Administration’s budget for FY 2010 contains a provision that could lead to more required e-filing by tax return preparers. The proposal, which would be effective for calendar year 2011 returns if adopted, is as follows:
Current Law The Department of the Treasury currently may issue regulations regarding when tax returns must be filed electronically on magnetic media or in other machine-readable form. But the regulations may not require individuals, estates, or trusts to file their tax returns electronically. In addition, the regulations may not require any person to file electronically unless the person files at least 250 tax returns during the calendar year.
Reasons for Change:
Electronic filing benefits taxpayers and the IRS because it decreases processing errors, expedites processing and payment of tax refunds, and allows the IRS to efficiently maintain up-to-date taxpayer records.
Proposal The proposal generally would maintain the current rule that regulations may not require any person to file electronically unless the person files at least 250 tax returns during the calendar year. But the proposal also would provide an exception to this rule under which regulations may require electronic filing by tax return preparers (as currently defined in the Internal Revenue Code) who file more than 100 tax returns in a calendar year. The proposal also would allow regulations requiring tax return preparers who file more than 100 returns (or any other person who files more than 250 returns) to file electronically tax returns for individuals, estates, or trusts.
The proposal would be effective for tax returns required to be filed after December 31, 2010.
Allow us to summarize: the regulations may not require e-filing unless a person files at least 250 tax returns per year, in which case the regulations may require e-filing by a tax return prepare who files more than 100 tax returns per year. Got it?
This provision appears on page 106 of the General Explanation of the Administration’s Fiscal Year 2010 Revenue Proposals, a complete copy of which you may find at the following weblink: http://www.treas.gov/offices/tax-policy/library/grnbk09.pdf
2009 State Bills
Did you ever wonder what your officers and committees were doing while you were preparing tax returns? Not that those officers and committee members did not also have tax returns they were preparing for clients. Well, to give you just a glimpse, the attached table gives you a sample of some of the state legislative efforts just one of your committees was following during tax season. By "following" we mean not just reading about it, but actively participating in some cases with legislators as they debate your well-being, whether your are a CPA, attorney, EA, ACAT credential holder or are just working on your first credential.
IRS 941 Forms & The Stimulus Act
The stimulus bill - technically the American Recovery and Reinvestment Act of 2009 - bill provides a 65% subsidy for COBRA continuation premiums for up to 9 months for workers who have been involuntarily terminated, and for their families. To qualify for premium assistance, a worker must be involuntarily terminated between September 1, 2008 and December 31, 2009. The subsidy would terminate upon offer of any new employer-sponsored health care coverage or Medicare eligibility. Workers who were involuntarily terminated between September 1, 2008 and enactment, but failed to initially elect COBRA because it was unaffordable (note: how is that determination made?), would be given an additional 60 days to elect COBRA and receive the subsidy. The employer is reimbursed for the cost of the subsidy by treating the amount that is reimbursable to the entity as a credit against its liability for payroll taxes (if this amount is insufficient, IRS or Treasury will directly reimburse the employer).
The IRS released a revised Form 941 so that employers can properly report their employment tax liabilities under the new law. A copy of the new Form 941, 941ss and instructions can be found below:
Form 941
Form 941ss
Form 941 Instructions
Amendments to Circular 230 Made Final; 'Limited Practice Rights' Retained
The Treasury Department on Tuesday, September 25 issued final rules making amendments to Circular 230. NSA Members will recall that proposed rules had been issued on February 8, 2006. NSA is pleased that the Treasury Department has agreed with our objection to the proposal to do away with the so-called "limit practice rights" for those individuals who prepared a return. Under the proposal, these individuals, who are not otherwise covered by Circular 230 because they are not attorneys, CPAs, EAs or PAs, could not even respond to IRS questions about a return they had prepared. This provision has not been retained in the final rules and we applaud Treasury for heeding the advice of practitioners to drop this rule. To quote the Treasury: "the authorization in §10.7(c)(viii), which allows an individual, who was not otherwise a practitioner, to represent a taxpayer during an examination if that individual prepared the return for the taxable period under examination, is retained. An unenrolled return preparer who prepared the taxpayer's return for the year under examination, therefore, may continue to negotiate with the IRS on behalf of that taxpayer during an examination or bind that taxpayer to a position during an examination."
Click here for a copy of the regulation.
NSA Urges Senate to Ban Tax Strategy Patents
NSA praised the U.S. House of Representatives for passing H.R. 1980, the Patent Reform Act of 2007, which includes a section that would prohibit patents on tax strategies, which are allowed under current law, and urged the Senate to act promptly on this matter as well.
National Society of Accountants Statement for the Record to the Senate Finance Committee: Filing Your Taxes: An Ounce of Prevention is Worth a Pound of Cure
Click here for:National Society of Accountants Model Bill on Tax Preparer Registration
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NSA Annual Meeting
August 12-15, 2009
San Diego, CA
Register by July 1st and Save $100!
Enrolled Agent Review Course
Accredited Business Accountant/Advisor (ABA) Cram Course & Exam
August 10-12, 2009
San Diego, CA
NSA PAC Silent Auction Donation Form
2009 ASO Survey
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Affiliate News—June 2009
The online monthly newsletter designed for NSA's Affiliated State Organizations.
2008 NSA Income & Fee Survey Report Now Available for Download
Find out how your practice compares in term of fees, salaries, business mix and more. For the highlights and press release, click here: NSA 2008 Fee Survey
NSA Learning Gateway
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