Tax Preparer Legislation Update

Jul 21, 2021 | CPA Blog |

The Tax Protection and Preparer Proficiency Act, a new bill introduced to the House of Representatives regarding tax preparer regulations, has been in the works for quite awhile. 

You may or not remember, but 10 years ago in 2011, the IRS implemented a program to work towards this very goal, but a decision made in the Loving’s court case forced the program to shut down due to the IRS being told they lacked the authority.

However, in May of 2021, the AICPA sent a letter to congressional leaders regarding paid income tax preparers regulation in support of enforceable ethical conduct. The idea is to improve the level of compliance within the tax environment, something that the IRS currently lacks the authority to regulate.

The AICPA stated they were not interested in the IRS gaining a broad authority over the regulation, but instead are in support of the parameters outlined by the bill..

The AICPA also does not see this bipartisan bill moving forward without a companion bill in the Senate. They believe that there is hope for this to move forward as part of a larger tax measure, hopefully sometime this year. 

A key aspect of the bill that the AICPA is interested in, that was not implemented in the 2011 program due to the court case, is that tax preparers that are registered under the IRS’s program need to include a descriptor that states the IRS does not endorse any particular tax preparer. Claiming to be an IRS-authorized tax preparer is misleading to the public, due to the fact that the IRS does not endorse any particular tax preparer. 

As of now, this bill has a possibility of moving forward as part of a larger tax bill, and that tax bill may be part of the Biden administration’s infrastructure legislation being discussed in Washington.   

With that being said, the infrastructure legislation is not likely to close until the end of the year, therefore, the tax bill would most likely not pass until around the fourth quarter of this year. 

Stay tuned as we will let you know about any updates.