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Arianna Caldwell Comments on AICPA's Challenge to IRS Voluntary Tax Return Preparer Program
Caplin & Drysdale

Arianna Caldwell Comments on AICPA's Challenge to IRS Voluntary Tax Return Preparer Program

Date: 6/1/2017

Both sides in the American Institute of CPAs’ appeal of its challenge to the IRS’s voluntary tax return preparer program have staked their claims on confusion: The IRS is focusing on potential taxpayer confusion between participating preparers and less-qualified ones outside the program, while the AICPA is concerned about distinguishing between participants and better-qualified CPAs.

. . .

Arianna Caldwell of Caplin & Drysdale said that the AICPA’s concern about confusion has a lot of merit, especially when compared with the history of attorney advertising. Independent organizations used to be able to offer certifications on particular types of law, but the practice was curtailed because the difference between the various certifications was perplexing to consumers, she said. The AICPA also has a good point that the annual filing season certificate of completion could be a confusing government endorsement to an unsophisticated consumer, she said.

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The AICPA has requested that the circuit court address the underlying merits of the case if it determines that the AICPA satisfies the zone of interests test.

The IRS asserted that it properly formulated the annual filing season program because the limited practice rights of unenrolled return preparers had already been revoked by the notice and comment rulemaking that included the standards overturned in Loving v. IRS, 917 F. Supp.2d 67 (D.D.C. 2013), aff'd 742 F.3d 1013 (D.C. Cir. 2014).

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Caldwell said that further development of the notice requirements of the APA in this context could be valuable. She said that she has not previously heard the argument that the IRS made in its brief, that actual notice in this context is sufficient under the APA. “It’s certainly not consistent with the view that agencies should be subject to these checks and balances and notice and comment proceedings by the public,” she said.

One purpose of the APA is to rein in agency action, Caldwell said. She questioned the idea that actual notice to just a portion of the industry could exempt the IRS from formal notice and comment. Further, a lack of notice among unregistered preparers could explain the program’s low participation rates, she added.

For the full article, please visit Tax Notes’ website (subscription required).

Excerpt taken from the article “Both Sides in AICPA Appeal Focus on Potential Consumer Confusion” by Nathan J. Richman for Tax Notes.

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