NEWS from NSA

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  • The Hits Just Keep On Comin’ Part 3: House Votes To Cut IRS Budget By 13%

    Monday, July 21, 2014 5:07 PM | NCSA Website Manager (Administrator)

    The IRS Budget would be cut by13 percent, or $1.4 billion, under an appropriations bill passed 228-195 in the House earlier this week. If enacted, this would mark a further decline in funding for the IRS, which received a $526 million budget cut as part of the fiscal year 2014 omnibus appropriations bill signed by the president Jan. 17.

    House Republicans said the cuts were meant to send a message to the IRS and its commissioner, John Koskinen, to comply with investigations related to the 501(c)(4) scandal. “I think most people in this House would say that the IRS has betrayed the trust of the American people and they have got a long way to go before they restore the Americans' trust,” Financial Services and General Government Subcommittee Chairman Ander Crenshaw (R-Fla.) said on the House floor shortly before the bill's passage July 16. Crenshaw called on the House to pass the bill and “rein in out of control spending” at the tax agency, sending the IRS “back to their core issues.”

    Rep. Crenshaw, apparently, does not consider it a “core issue” for the IRS to have sufficient funds to answer telephone inquiries from those seeking to comply with the tax law or to have sufficient funds to properly train employees charged with answering the phones. House Republicans are seemingly in desperate need of adult supervision.

    Cutting enforcement would reduce revenues by more than the savings from cutting the number of IRS people,” Congressional Budget Office Director Douglas Elmendorf told lawmakers at a House Budget Committee hearing July 16. “And if you devoted more resources to enforcement, you would reap extra revenues that would probably outweigh the costs of extra enforcement.”

    The White House issued a veto threat July 14, in part, because of the provision restricting funds to implement the ACA. “Reverting the agency's funding level to FY 2008 levels would hinder IRS efforts to provide robust service to taxpayers, improve enforcement operations, and implement new statutory responsibilities,” it said. In addition, the spending bill would hurt deficit-reduction efforts by limiting IRS revenue collection functions and damage the agency's role in putting the Affordable Care Act in place, the statement said.

  • The Hits Just Keep On Comin’ Part 2: AICPA Sues to Stop IRS Annual Filing Season Program

    Monday, July 21, 2014 5:06 PM | NCSA Website Manager (Administrator)

    The AICPA has filed a lawsuit in the U.S. District Court for the District of Columbia seeking to stop the IRS’s Annual Filing Season Program tax preparer program on the grounds that the IRS does not have the authority to implement such a program (Am. Inst. of Certified Pub. Accountants v. IRS, D.D.C., No. 14-1190, 7/15/14). The lawsuit seeks declaratory and injunctive relief. It asks the court to declare the program unlawful and keep the IRS from implementing any action related to it.

    The AFSP will allow tax return preparers who are not attorneys, CPAs, or EAs to get a record of completion when they voluntarily undergo a required amount of continuing education and pass a comprehension test. AFSP participants will also be included in a public database of return preparers scheduled to launch on the IRS website by January 2015. The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications will include the name, city, state, zip code, and credentials of all attorneys, CPAs, enrolled agents, enrolled retirement plan agents and enrolled actuaries with a valid PTIN, as well as all AFSP – Record of Completion holders.

    The AICPA says it opposes the AFSP because it is an end-run around the Loving v. IRS court decision in February that struck down the IRS's mandatory tax preparer program. “The IRS simply does not have the authority to proceed with the new rule,” AICPA President and Chief Executive Officer Barry Melancon said in a July 15 news release announcing the lawsuit. He went on to say the AFSP is a “de facto mandatory program” because it creates a strong competitive incentive for unenrolled tax return preparersundefinedthose that are not CPAs, attorneys, or enrolled agentsundefinedto comply.

    A number of NSA members have reported that no unenrolled preparers have expressed the view that the benefits of the AFSP are so great that they feel they would have to volunteer or be at some sort of competitive disadvantage. Furthermore, they state that the tax return preparation business for small practitioners thrives on word of mouth advertising (“Who is your tax return preparer? Is she good?”) that would be unaffected by the AFSP. So, we have to question whether the AFSP is as “de facto mandatory” as the AICPA seems to think. We have also heard from a number of CPA members of NSA who question why the AICPA cares about the AFSP, given that its members are exempt from the program, and why AICPA is using their dues dollars on this.

    While NSA has concerns about the AFSP, specifically with the implementation of the testing provision and making appropriate distinctions between AFSP participants and credentialed practitioners, such as CPAs and EAs, we do not oppose the program. Rather, NSA’s view remains that those members who are unenrolled are sufficiently competent to determine for themselves whether participation in the AFSP would be a benefit to their business and, if so, whether they want to volunteer or not.

    A copy of the AICPA lawsuit is available here. 

  • The Hits Just Keep On Comin’ Part 1: Court Invalidates Contingent Fee Section of Circular 230 When Applied To Tax Return Preparers

    Monday, July 21, 2014 5:04 PM | NCSA Website Manager (Administrator)

    A federal court has ruled that the IRS exceeded its authority when it attempted, in Section 10.27 of Circular 230, to regulate the contingent fees charged for the preparation and filing of ordinary refund claims by a CPA who did not “represent” the taxpayer. (Ridgely v. Lew, D.D.C., 1:12-cv-00565, 2014 BL 196974, 7/16/14).

    In the July 16 decision, Judge Christopher R. Cooper of the U.S. District Court for the District of Columbia said that the issue in the case was “the IRS's proclaimed authority to regulate fee arrangements entered into by CPAs for preparing and filing Ordinary Refund Claims before the commencement of any adversarial proceedings with the IRS or any formal legal representation by the CPA.” Cooper relied heavily on the reasoning set forth in the U.S. Court of Appeals for the District of Columbia's decision in Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), which found that the IRS lacked authority under 31 U.S.C. Section 330 to regulate tax return preparers because the statute unambiguously showed that the IRS's regulation authority didn't extend to tax preparers because their activities didn't constitute practicing before the IRS. 

    Cooper said that, “CPAs preparing and filing [Ordinary Refund Claims] before possessing any power of attorney possesses no legal authority to act on behalf of taxpayers. In Loving’s words, these individuals merely ‘assist‘ the taxpayer. Thus, Section 330’s use of the term ‘representative’ excludes refund claim preparers, just as it did tax-return preparers in Loving.”

    The opinion also addressed the IRS contention that, “it has authority to regulate all actions of CPAs whoundefinedat some pointundefined‘practice’ before it, regardless of whether they’re acting in a representational or non-representational capacity.” The opinion specifically found that:

    • “As Loving made clear, Section 330 only applies to individuals when they represent taxpayers”; and
    • “Adhering to the IRS’s position would lead to absurd results. According to the IRS, it could broadly regulate the actions of CPAs no matter what they were doingundefinedeven if their conduct was nowhere close to “practicing” before IRSundefinedsimply because, say, the CPAs “practiced” before the IRS once a year. Meanwhile, the IRS would impose no contingent fee restrictions on the preparation and filing of Ordinary Refund Claims by non-CPAs and those who never “practice” before the IRS.

    The text of the opinion is available here.

  • NSA 69th Annual Meeting The Latest

    Thursday, July 10, 2014 5:04 PM | NCSA Website Manager (Administrator)

     

    NSA 69th Annual Meeting The Latest

    Last Chance to Save! Deadline for Early Bird Rates for NSA 69th Annual Meeting is July 15!

    RegisterToSave100(1).jpg


    Register by July 15 and save $100 off the regular registration price for the annual meeting. The full registration comes with numerous networking, sightseeing, and learning opportunities that makes this meeting one not to be missed.

     

     

    Register_Now_red.jpg

    NSA Annual Meeting

    Baltimore Inner Harbor

    QUICK LINKS
     


  • IRS Releases Video Listing of the 'Dirty Dozen' Scams for this Year

    Thursday, July 10, 2014 4:58 PM | NCSA Website Manager (Administrator)


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    Each year, the IRS compiles a list of the top twelve tax scams of the year, called the 'Dirty Dozen.' The scams at the top of the list shouldn't be of great surprise, with telephone scams moving to second this year, after numerous states reporting a surge of bogus phone calls from folks claiming to be IRS agents required to collect money from unsuspecting victimsundefinedmany even threaten jail time if money isn't wired or a credit card isn't provided on the spot. Read the latest list and stay informed to protect yourself and your clients.
    Watch the video


  • New IRS Annual Filing Season Program

    Thursday, July 10, 2014 4:57 PM | NCSA Website Manager (Administrator)

    This new program aims to recognize the efforts of non-credentialed return preparers who aspire to a higher level of professionalism. Meet the requirements by obtaining 18 hours of continuing education, including a six hour federal tax law refresher course which includes a test, and you will receive an Annual Filing Season Program – Record of Completion from the IRS.

    Visit the NSA webpage devoted to bringing you the latest information on the AFSP here.  

  • NSA ALERT - Circular 230 Revised – Please Delete Email Disclaimer

    Thursday, July 03, 2014 11:31 AM | NCSA Website Manager (Administrator)

    Final regulations amending on Circular 230 were issued June 9 and took effect June 12. The regulations and, in particular, eliminated the need to follow a separate set of standards regarding “covered opinions” when providing written advice to clients. It was the covered opinion provision that led to the Circular 230 disclaimer found in the emails of virtually all practitioners. 

    No More. At a recent tax conference, IRS chief counsel William J. Wilkins told practitioners in a keynote address that the “Circular 230 disclaimer is not merely dead, it's really most sincerely dead. So please omit.” So, NSA members are advised to change their email settings and eliminate the Circular 230 disclaimer.

    According to Karen Hawkins, head of the IRS Office of Professional Responsibility, the old covered opinion provision has been replaced with a new Circular 230 Section 10.37 on due diligence governing written advice. The new provision is a “principles-based regulation. It is intended to be very broad, it is intended to leave a lot of leeway, both at your end and at my end, in terms of how we analyze this,” Hawkins said.

    The provision requires practitioners to make reasonable factual and legal assumptions, she said. “You have to put reasonable amounts of effort into ascertaining what the relevant facts are. You have to reasonably consider all the relevant facts and circumstances with respect to what you know or what you should know.” Practitioners may not rely on representations from a client or another individual if the reliance cannot be deemed reasonable, she said.


  • NSA ALERT - IRS Launches New Voluntary Program for Tax Preparers, ACAT Credential Holders Exempt From Annual Refresher Course and Testing

    Thursday, July 03, 2014 11:27 AM | NCSA Website Manager (Administrator)

    As expected, the IRS has announced a new voluntary version of the tax preparer certification program. The new version, dubbed the “Annual Filing Season Program” or AFSP, will allow unenrolled return preparers to get a record of completion if they voluntarily undergo a required amount of continuing education, including a course in basic tax filing issues and updates, ethics and other federal tax law courses, the IRS said in a news release.

    The IRS provided more information on the AFSP on June 30 in Revenue Procedure 2014-42 (available here), which provided the following information:

    • Preparers who are not attorneys, certified public accountants, or enrolled agents and who choose to engage in the annual filing season program must have a PTIN and must apply by using the online preparer tax identification number application system;
    •  Only applicants who successfully complete an annual federal tax filing season refresher course that is administered by an IRS-approved continuing education provider (note that NSA is an IRS-approved provider) are eligible to participate in the Annual Filing Season Program. The refresher course must generally cover tax law and filing requirements relevant to Form 1040 series returns and schedules. The refresher course must be 6 hours and must include a test of the material with a minimum of 100 questions. To successfully complete the refresher course, the applicant must pass the test by answering 70% of the questions correctly (or a higher percentage if set forth in forms, instructions, or other appropriate guidance);
    • As part of the transition to this program, applicants for the AFSP for the 2015 calendar year are required to complete 11 hours of continuing education during 2014. For applicants who must complete the refresher course, the refresher course will satisfy 6 hours of the 11-hour requirement; the other 5 hours must consist of 3 hours of federal tax law topics and 2 hours of ethics or professional responsibility. Applicants not required to take the refresher course must complete 8 hours of continuing education consisting of 3 hours of federal tax law updates, 3 hours of federal tax law topics, and 2 hours of ethics or professional responsibility.
    • As a prerequisite to participation in the AFSP and receiving a Record of Completion, an applicant must consent to be subject to the duties and restrictions relating to practice before the IRS in subpart B and section 10.51 of Circular 230 for the entire period covered by the Record of Completion.
    • Revenue Procedure 81-38 is modified and superseded for tax returns and claims for refund prepared and signed (or prepared if there is no signature space on the form) after December 31, 2015. Unenrolled tax return preparers may not rely on Revenue Procedure 81-38 to represent taxpayers during an examination of a tax return or claim for refund prepared or signed after December 31, 2015. However, unenrolled tax return preparers may rely on Revenue Procedure 81-38 to represent taxpayers during an examination of a tax return or claim for refund prepared and signed (or prepared if there is no signature space on the form) on or before December 31, 2015.
    • The IRS is also developing a database of qualified tax return preparers that will be available on the IRS website by January 2015. The database will include the unregulated preparers who choose to participate in the voluntary education program and will also include attorneys, certified public accountants, and EAs.

    Readers should note that:

    1.  The IRS will exempt from taking the annual refresher course and annual testing those preparers who have taken and passed an ACAT test as well as certain other examinations, including the RTRP test and the test offered to preparers in the State of Oregon.
    2. NSA is an approved IRS Course Provider and will be providing an online tax refresher course and test that will satisfy the IRS AFSP requirements. 
    Preparers who volunteer for the AFSP and receive a Record of Completion may not use the term “certified,” “enrolled,” or “licensed” to describe this designation. NSA is fully in support of this restriction as a way to differentiate CPAs and EAs who have undergone a significantly more rigorous regimen for their credential.

    The voluntary program is a temporary substitute for testing and continuing education components of the mandatory program that the U.S. District Court for the District of Columbia threw out in Loving v. IRS, according to IRS Commissioner Koskinen. “I say temporary only because we have been urging Congress to enact a proposal in the president's fiscal year 2015 budget that would clearly give us the authority for mandatory oversight of return preparers,” Koskinen said.

    Koskinen also acknowledged that the AICPA opposed the AFSP because the group believes it is unlawful. However, Koskinen said after consulting with the IRS Office of Chief Counsel and Treasury counsel that the IRS is comfortable it has the legal authority to proceed.
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