“The first reaction to truth is hatred.”
Because some of my fellow tax bloggers have been unable to grasp the simple concept that there are qualitative differences between those tax preparers who have been required to prove their core competence to an independent third party regulatory body and those tax preparers who have not, I thought it would be useful to reproduce in its entirety an IRS information notice titled The Unenrolled Tax Preparer. The emphases are mine.
The Unenrolled Tax Preparer
Limited Practice Without Enrollment Rev. Proc. 81-38
Publication 470, Limited Practice Without Enrollment explains Revenue Procedure 81-38 , which prescribes the standards of conduct, scope of authority, and the circumstances under which an individual preparer of tax returns may exercise the privilege of limited practice as the taxpayer’s representative before the IRS, without enrollment and pursuant to section 10.7(a)(7) of Treasury Department Circular No. 230.
The Unenrolled Return Preparer
The unenrolled return preparer is eligible to represent a taxpayer only with regard to a tax liability arising from a tax return prepared by that individual.
As the taxpayer’s representative, the unenrolled return preparer is expected to recognize questions, issues and factual situations related to the tax return at issue and assist in the resolution of the tax matter.
Limited Representation
Representation is defined as advocating, negotiating, arguing facts or law before the IRS or acting on behalf of the taxpayer. The unenrolled return preparer may only practice or act as the taxpayer’s representative before examining officers of the Compliance function (Examination). The preparer may not act in this capacity before the Appeals and Collection offices (including ACS), and Headquarters officials.
In addition, the following acts are beyond the scope of the unenrolled return preparer:
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Executing claims for refund
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Receiving checks in payment of any refund of IRS taxes, penalties or interest
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Executing consents to extend the statutory
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Executing closing agreements with respect to a tax liability or specific matter
- Executing waivers of restriction on assessment or collection of a deficiency in tax
Tax Information Authority
Any third party may be designated to receive tax information. When an unenrolled return preparer is designated on a power of attorney form but either did not prepare the tax return at issue or is corresponding with other than examining officers of Compliance function, the preparer is still entitled to receive account information related to period of assessment or collection of tax those tax periods listed on the authorization.
The [unenrolled] preparer is not able to:
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negotiate payment arrangements
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argue the validity of the assessment
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request extensions on deadlines
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request adjustments to an account
The reason unenrolled tax preparers are strictly limited in the things they are permitted to do is because they have not been licensed and are not regulated by any third party regulatory body. In other words, they are not members of a recognized profession.
And the reason CPAs, Enrolled Agents and Attorneys are not so limited is because they were initially required by an accredited third-party licensing and regulatory body to demonstrate their core competence and are currently required by that regulatory body to adhere on an ongoing basis to a set of rigorous technical and ethical standards.
If the word “profession” is to have any meaning at all, we must construe it in a way that will result in the inclusion of those who meet the standards set by a particular profession and the exclusion of those who do not meet those standards? Logic 101 and the common law rules of statutory construction demand such an interpretation.
Of course, the fact that an unenrolled preparer does not belong to a profession does not mean that he is incapable of acting in a professional manner or that he is incompetent or unscrupulous. It merely means that his professionalism and competency have not been tested and are not currently regulated.
Regardless of what some of our more hypersensitive unenrolled preparers might want you to believe, my position is not radical. And it certainly shouldn’t offend experienced and competent unenrolled preparers like Messrs Flach and McFarland who are in favor of IRS regulation of tax preparers.
I am afraid that what we have here is a simple case of some folks killing the messenger because they don’t like the message. But hey, I don’t make the rules, I just play by them.
End of story?
4 responses so far ↓
1 Bruce // Oct 21, 2009 at 12:32 pm
What is not present here are the things an unerolled preparer “can” do with the tax payer in tow, or under special cercomstances.
But thats okay.
The fray is over.
2 The Cast // Oct 22, 2009 at 1:33 pm
[...] [...]
3 Dylan // Oct 24, 2009 at 11:45 am
You’ve managed to successfully argue that an unenrolled preparer is not a member of a legal profession or a taxpayer representation profession, but nothing in the notice you cite supports a claim they are not a member of a tax preparation profession. You actually have called attention to existence of standards and regulations, including ethics and conduct, by which the unenrolled prepare must abide.
It appears that you are relying on a licensing requirement to define membership in a profession. The counter argument is simply that it licensing is not a requirement to be a member of some professions, including tax preparation. You say that for the word “profession” to have any meaning at all, “we must construe it in a way that will result in the inclusion of those who meet the standards set by a particular profession and the exclusion of those who do not meet those standards.” I don’t think any of you’re critics are disputing that. You seem to have reached the conclusion that standards cannot exist and that professionalism and competency cannot be evaluated without licensing. Your critics disagree with that.
The argument that unenrolled preparers cannot represent taxpayers in appeals or other limited activities is not relevant because unenrolled preparers are not claiming to be members of a profession performing those practices. Whether those same critics would like to see more formalized standards is also not relevant to to their position that professional tax preparers are members of a profession.
Lastly, you again refer to your opinion that an unenrolled preparer does not belong to a profession as a “fact.” When I challenged that in a prior post, you gave a snarky response. I found that amusing considering the quote with which you started this post. For a professional attorney, I would have assumed that you could recognize and appreciate a good argument, even if you don’t agree.
As for the bloggers that took issue with your original post. You negatively challenged the way others view themselves. Did you really expect them not to respond?
4 Peter // Oct 27, 2009 at 1:53 am
Dylan,
Excellent, excellent comment. I appreciate it.
If I was snarky, I apologize. My snark factor was up as apparently was everyone else’s.
I do appreciate a good argument even if it doesn’t conform to my own. But you might have noticed that my detractors chose, as usual, to hurl personal insults rather than to deal with the specific points I raised in my post.
I expected, even welcomed, disagreement with the conclusions reached in my post. That’s why I wrote it.
People rarely leave comments when they agree with what you say. They almost always leave them when they disapprove of what you say.
Let me give you an example of the kind of debate I was hoping to create. Mary O’Keefe, an unenrolled preparer, left several comments on my several posts about professions and professionalism. She disagrees with me vehemently, yet she never once attacked me personally nor did she question my motives.
Now, take a gander and see how I respond to her comments. I think you will find them quite civil, darn near cordial.
As for the others, they accused me at various times of stealing from my clients by advising them to incorporate just so I could get the fees, of having a vested interest in defaming unenrolled preparers, of being threatened by unenrolled preparers (but presumably not enrolled agents, other CPAs and other tax attorneys, go figure), of being a pompous ass, a low class individual, a fool, and just about everything short of conducting eye color experiments on twins.
How do you deal with that?
By the way, you are absolutely right when you say:
As I said before, I not only expected them to respond, I wanted them to respond. That’s kind of the idea of having a blog. If nobody responded, or if everyone always agreed with me and told me how wonderful I was, I and those who read this blog would get bored very quickly.
Okay, maybe not that quickly, but you get the point.
By the way, I never challenged the education, intelligence, character or competence of a single one of them. In fact, I went out of my way to point out that I believed each of them to be extraordinarily competent.
They still chose to take offense. And it was a choice.
I guess Paul Simon was right when he said:
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