Congressmen Concerned About New PTIN Rule

Congressmen Brad Sherman (D-Calif.) and Michael Conaway (R-TX), both CPAs, are speaking out against the IRS' new requirement for all paid tax-return preparers to register for a preparer tax identification number (PTIN), saying the new rule will increase paperwork, costs and confusion over preparer qualifications.

In an opinion piece for the Wall Street Journal, Sherman and Conaway applauded the IRS’ efforts to ensure taxpayers are able to get quality help by tracking the work of tax preparers and finding them if problems occur, but noted that the plan will add “needless burden and expense.”

The IRS recently announced that all paid tax return preparers -- including CPAS, tax attorneys and enrolled agents -- must register for a PTIN. While tax attorneys, CPAs and enrolled agents are subject to extensive oversight and testing, others who also prepare tax returns for a fee are not. This may give taxpayers a false sense of security that all tax return preparers have equal qualifications because they have a PTIN.

“No independent cop on the beat protects taxpayers from the unprepared preparer,” Sherman and Conaway wrote. “The proposed registration program would bring unregulated preparers within reach of the IRS, enabling it to identify those with a pattern of shoddy work, and, if necessary, act to protect taxpayers. That's the good news.

“But the effort is flawed by plans to apply it too widely … to basically every person who may touch a return,” they continued.

Furthermore, they wrote, the addition of millions of registrations, including nonsigning preparers (those who are not authorized to direct and review the work and sign the return), would create needless additional paperwork and expense passed on to taxpayers, but not provide added protection. The IRS also plans on subjecting newly registered preparers to competency tests, which the authors said is excessive.

Sherman and Conaway wrote that the IRS should instead waive the PTIN and testing for nonsigning preparers at CPA firms to save costs and allow the IRS to focus on “initiatives that best protect the public.”

The authors said they appreciate the IRS’ efforts to ensure the competency of tax return preparers but that it may put its good efforts “at risk if it tries to do too much too soon with excessive and duplicative regulation of those … who are already covered by strong and effective oversight. To maximize effectiveness, the IRS should close the obvious gaps first. Only later, after careful empirical study, should it determine if any additional regulations on preparers are warranted.”