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IRS Advisory Panel Recommends Regulating Noncredentialed Tax Preparers

S.J. Steinhardt
Published Date:
Jun 27, 2024

The IRS’s Electronic Tax Administration Advisory Committee (ETAAC) released its annual report, making three recommendations to Congress and nine others to the IRS, Accounting Today reported.

The recommendations to Congress included regulating noncredentialed tax preparers and increasing funding for the IRS and the National Taxpayer Advocate.

The recommendations to the IRS included enabling application programming interface access to taxpayer information in order to disrupt scams, promote modernization, accuracy, security and efficiency in the taxpayer experience; removing barriers to electronic filing while enhancing security by developing an alternative to the self-select personal identification number (PIN) process with a more secure IRS e-file PIN; and promoting greater information sharing with states and industry partners of homogenized tax data, metrics, year-over-year metrics and seasonal information.

The IRS has previously considered credentialing preparers, Accounting Today reported. The IRS began to roll out the Registered Tax Return Preparer Program, which required registration, testing and continuing education for noncredentialed tax preparers, during the Obama Administration. But it was invalidated in 2013 by a federal judge, who ruled that the IRS lacked the statutory authority to regulate preparers, although it could still require them to register with a Preparer Tax Identification Number, or PTIN.

Since then, Congress has considered other bills have been introduced to regulate unlicensed preparers, and the Biden Administration included a proposal in its American Families Plan in 2021.

"Congress should authorize the IRS to regulate noncredentialed tax return preparers to prevent harm to taxpayers and the tax system," the report states. "The IRS has the capability to implement a program that effectively trains and educates tax return preparers through its existing Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) training programs. This recommendation could be replicated from the framework of VITA and TCE for noncredentialed preparers. Implementing such a program would undoubtedly pay for itself and serve to protect the federal fisc."

“ETAAC members serve as trusted advisors to the IRS on key issues of interest to tax administration and taxpayers,” said IRS Commissioner Danny Werfel in a statement. “The committee has helped on a variety of fronts to help improve tax administration. The IRS leadership team will carefully review the recommendations in this report.”

ETAAC members represent various segments of the tax community, including individual and business taxpayers, tax professionals and preparers, tax software developers, payroll service providers, the financial industry and state and local governments.

The ETAAC operates under the rules of the Federal Advisory Committee Act. It works closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation's tax industry, established in 2015 to fight tax-related identity theft and cybercrime.

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