IRS Plans To Regulate Tax Return Preparers

IRS/States Explore Nationwide Registration, Testing for All Preparers
IRS Commissioner Douglas H. Shulman on September 2 questioned if CPAs, attorneys and enrolled agents (EAs) should be exempt from any nationwide registration and examination of return preparers. Representatives from four states that license unenrolled preparers urged the Service to create a uniform registration system for all preparers but stopped short of recommending a new layer of testing or licensing for CPAs, attorneys and EAs already engaged in return preparation.

Oversight Study
Shulman spoke at the IRS's second forum on tax practitioner oversight in Washington, D.C. (IR-2009-74; TAXDAY, 2009/08/18, I.2). At the Service's first forum, held in July, representatives from tax professional associations told the IRS that registration and testing of return preparers should not create a competing credential (TAXDAY, 2009/07/31, I.1).

"I commit by the end of the year to make a set of recommendations," Shulman said (IR-2009-57; TAXDAY, 2009/06/05, I.1). Some of the recommendations may need legislative action; others will be enacted administratively by the IRS, Shulman explained. "All ideas are on the table," he added.

State Regulation
Four states currently regulate unenrolled (non-Circular 230) practitioners. California, Maryland, New York and Oregon exempt different groups of credentialed tax professionals from registration and testing requirements.

California has approximately 80,000 individuals engaged in paid return preparation, Ruth Moore, a manager with the California Franchise Tax Board, said. California exempts CPAs, attorneys and EAs from its return preparer registration and education requirements, Celeste Heritage, administrator, California Tax Education Council (CTEC) explained. The CTEC oversees the registration and education of approximately 44,000 preparers who have earned the designation CTEC Registered Tax Preparer (CRTP).

The perception that CRTPs are mostly storefront operations is very inaccurate, Heritage told CCH. "It's a large universe of tax preparation. There are many CRTPs who have multiple offices and large staffs providing services to thousands of taxpayers." These include business and individual clients, as California's registration and testing regime is not limited to individual return preparation, Heritage said.

Oregon has required registration and examination of preparers for 37 years, Ron A. Wagner, executive director, Oregon Board of Tax Practitioners, said. Oregon exempts CPAs and attorneys. Enrolled agents may qualify for a partial exemption.

Two states --Maryland and New York --recently enacted return preparer registration and testing requirements. Maryland exempts CPAs, attorneys and EAs, Wallace A. Eddleman, assistant director, Office of the Comptroller, said. The registration requirements were scheduled to begin in 2010, but the state's budget crisis has delayed implementation.

In New York, legislation was proposed to cover all preparers regardless of professional credentials, Jamie Woodward, acting commissioner, New York Department of Taxation, note. As passed, New York's new preparer law exempts CPAs and attorneys but not EAs.

Registration
All of the state speakers recommended that the IRS require paid preparers to use a unique identification number. "The same number should be used in preparing federal and state returns," Moore said. All preparers, including CPAs and attorneys, should have a unique number, Woodward added.

In written comments to the IRS, the National Association of Enrolled Agents (NAEA) expressed concerns about a unique preparer number. "A preparer number conceivably creates a world in which preparers lead taxpayers to believe the mere presence of a number indicates proficiency. A preparer number no more denotes competency than years of preparer experience."

The American Institute of Certified Public Accountants (AICPA), in written comments to the IRS, recommended that use of a unique identification number be accompanied by enforcement of preparer standards. The AICPA also urged the Service to regulate all preparers under Circular 230.



Statement by Michael McKenney before the IRS's Tax Return Preparer Review Public Forum


Statement by Michael McKenney, Assistant Inspector General for Audit, Treasury Inspector General for Tax Administration, Internal Revenue Service Return Preparer Review, Before the IRS's Tax Return Preparer Review Public Forum

September 3, 2009

Internal Revenue Service : Tax Return Preparer Review Public Forum : Treasury Inspector General for Tax Administration : Statement of TIGTA Assistant Inspector General for Audit Michael McKenney .


STATEMENT OF MICHAEL MCKENNEY ASSISTANT INSPECTOR GENERAL FOR AUDIT TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION


"Internal Revenue Service Return Preparer Review"

September 2, 2009

On behalf of J. Russell George, the Treasury Inspector General for Tax Administration, I would like to thank Commissioner Shulman for the opportunity to participate in this Public Forum on the IRS's Tax Return Preparer Review.

The Treasury Inspector General for Tax Administration (TIGTA) was established in January 1999 in accordance with the Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 to provide independent oversight of IRS activities. TIGTA promotes the economy, efficiency, and effectiveness in the administration of the Internal Revenue laws. It is also committed to the prevention and detection of fraud, waste, and abuse within the IRS.

TIGTA's Office of Audit and Office of Investigations both play vital roles in the government's oversight of the tax preparer community.

As part of TIGTA's statutory requirement to provide independent and objective oversight of the IRS, our Office of Audit periodically reviews the IRS's oversight of preparers. Since July 2008, TIGTA has issued four reports regarding tax preparers. These reports addressed the return preparer program, 1 the accuracy of tax returns prepared by a sample of unenrolled preparers, 2 the process taxpayers must use to report complaints against tax return preparers, 3 and the IRS's ability to identify and track paid preparers. 4

TIGTA's Office of Investigations also has a significant role in the oversight of the tax preparer community. Our Office of Investigations is charged with investigating attempts to impede the administration of the Internal Revenue laws. This responsibility extends to investigations of alleged criminal impropriety involving tax preparers.

The Office of Investigations routinely investigates tax return preparers who engage in schemes to defraud their clients and the government, such as:
 Preparers who overstate their qualifications - for example, those who falsely claim to be licensed attorneys, certified public accountants or enrolled agents.

 Preparers who steal clients' tax payments or tax refunds.

 Preparers who impersonate IRS employees or misuse the IRS seal or logo.

These are all activities that damage the reputation of the tax preparation industry as well as the overall integrity of tax administration. TIGTA will work closely with the IRS as it enforces any new laws and regulations put in place to ensure appropriate oversight of paid tax preparers and to address fraud and misconduct in the tax preparer community.



Standards and Improved Oversight Are Needed

The current lack of national standards for tax return preparers is cause for concern. Unqualified or unethical tax return preparers can cause enormous damage to the Federal tax system, to taxpayers and to the tax preparer community as a whole.

During the 2008 filing season, TIGTA found that a majority of tax returns prepared by a sample of unenrolled preparers contained substantial errors. TIGTA auditors posed as taxpayers in a large metropolitan area and paid to have 28 tax returns prepared at 12 commercial chains and 16 small, independently owned tax return preparation offices. The preparers in our sample were unlicensed and unenrolled.

TIGTA found that these preparers made substantial errors when completing tax returns and correctly prepared only thirty-nine percent of the returns. Of the sixty-one percent of the returns that were prepared incorrectly, sixty-five percent contained mistakes and omissions that were considered to have been caused by human error or misinterpretation of the tax laws. The remaining thirty-five percent contained misstatements and omissions that were considered to have been caused by willful or reckless conduct.

In addition, the Internal Revenue Code requires all preparers to be diligent in determining taxpayer eligibility for the Earned Income Tax Credit, sign the tax return, furnish their identification number on the tax return, and not improperly or recklessly disclose tax return information. However, none of the preparers in our sample exercised due diligence when determining whether our auditors were eligible to receive the Earned Income Tax Credit. Several preparers did not furnish the required identification numbers on the completed tax returns and/or did not sign the tax returns.

Furthermore, none of the preparers were able to prepare the business income and expense tax returns correctly. All preparers in our sample used commercial tax preparation software to prepare the tax returns.

While a system of national standards for training and testing would not have prevented all of the problems we encountered, such a system could help to reduce the number of inaccurate returns.

The IRS's experience with its volunteer sites provides some indication as to the benefits of using appropriate uniform standards. Over time, with increased emphasis on training, testing, and other tools, the accuracy rates at these sites have improved substantially. Based on our testing, the accuracy rate at volunteer sites has improved from zero in 2004 to 59 percent in 2009. However, the overall effect on tax administration would be much greater with increased emphasis on improving the accuracy of paid preparers, since 86.9 million tax returns are prepared by paid preparers compared to the 3.5 million returns prepared by volunteers (in 2008).



A Single Identification Number Should Be Required

Since 2006, TIGTA has recommended that the IRS require the use of a single Federal identification number for paid preparers and practitioners to improve the accuracy of its records and avoid duplicate information. To accomplish this, we recommended that it consider expanding the use of the Preparer Tax Identification Number (PTIN), which is used to uniquely identify tax return preparers. In July 2009, TIGTA reiterated its call for the use of unique Federal identification numbers in an audit report, which found that inadequate data on paid preparers impedes effective oversight by the IRS.

Test results from a statistical sample of 139 preparers demonstrated many of the challenges the IRS would face in attempting to identify the population of preparers. For example, multiple identifying numbers were used by 63 percent of the preparers in the sample --that is, preparers would use one identifying number, such as their Social Security Number, on certain returns they prepared for a fee and a different identifying number, such as their PTIN, on others returns prepared that same year. Certain preparers were found to have used their Employer Identification Numbers instead of their Social Security Numbers or PTINs when identifying themselves on returns. Additionally, six percent of the preparers could not be identified at all because the identifying numbers they provided were invalid.

Data on preparers are decentralized among more than 20 different IRS systems that are not integrated, and there currently are no data standards among these systems to easily match preparer information. The names of the 139 preparers in various IRS systems were inconsistent 45 percent of the time.

A unique identifying number for each preparer along with an effective management information system are necessary in order for the IRS to facilitate tax administration and provide effective oversight of preparers. Requiring that all preparers use a unique identifying number would allow the IRS, for example, to use the PTIN application process to identify the population of preparers. Additionally, appropriate audit trails should be established for filings by paid preparers using a single identifying number that could illuminate potential abuse by individual preparers of certain IRS programs, such as the Earned Income Tax Credit.



Responsibility for Oversight

In the IRS's Tax Return Preparer Review Public Forum on July 30, 2009, a number of panelists recommended that the Office of Professional Responsibility oversight responsibilities be extended to include unlicensed tax return preparers. We believe that this recommendation has merit.

Multiple offices and functions handle taxpayer complaints against preparers and complaints are generally not controlled and tracked. The IRS cannot determine how many complaints against tax return preparers it receives, how many complaints are investigated, and the total number of multiple complaints filed against a specific preparer or firm. As a result, the IRS is not able to evaluate such data in order to understand the root causes of taxpayer problems, identify areas of noncompliance and address procedures that need improvement.

In addition to improved guidance and tracking, the IRS needs to ensure that responsibility for oversight is well-coordinated and consolidated where possible. If the IRS implements new standards and requirements for paid preparers, one function within the IRS should have primary responsibility for overseeing implementation and compliance with those standards.

Thank you for the opportunity to participate on this panel, and I look forward to any questions that you might have.

1 While Documentation Was Not Available to Fully Assess the Return Preparer Program, Identification and Processing of Preparer Penalties Can Be Improved (Reference Number 2008-30-147, dated July 29, 2008).

2 Most Tax Returns Prepared by a Limited Sample of Unenrolled Preparers Contained Significant Errors (Reference Number 2008-40-171, dated September 3, 2008).

3 Inadequate Data on Paid Preparers Impedes Effective Oversight (Reference Number 2009-40-098, dated July 14, 2009).

4 The Process Taxpayers Must Use to Report Complaints Against Tax Return Preparers Is Ineffective and Causes Unnecessary Taxpayer Burden (Reference Number 2009-40-032, dated February 24, 2009).


AICPA Letter to IRS Commissioner Shulman Regarding Notice 2009-60, Standards of Conduct for the Tax Return Preparer Community and Increased Taxpayer Compliance

AICPA Letter to IRS Commissioner Shulman Regarding Notice 2009-60, Standards of Conduct for the Tax Return Preparer Community and Increased Taxpayer Compliance

September 3, 2009

Internal Revenue Service : Tax Return Preparer Review Public Forum : American Institute of Certified Public Accountants (AICPA) : Letter to IRS Commissioner Shulman : Notice 2009-60 : Standards of conduct : Increased taxpayer compliance .

August 31, 2009

The Honorable Douglas Shulman
Commissioner
Internal Revenue Service
CCPA:PD:PR (Notice 2009-60)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044

RE: Notice 2009-60, Standards of Conduct for the Tax Return Preparer Community and Increased Taxpayer Compliance

Dear Commissioner Shulman:

The AICPA is pleased to provide these comments on Notice 2009-60, Standards of Conduct for the Tax Return Preparer Community and Increased Taxpayer Compliance. We provide these comments as a supplement to the statement of Michael P. Dolan, our IRS Practice and Procedures Committee Chair, before the Internal Revenue Service Public Forum on the Tax Return Preparer Review held on July 30, 2009.

In our July 30 statement, Mr. Dolan stated the AICPA: (1) supports the Commissioner's efforts to ensure that "all preparers are ethical, provide good service and are qualified;" and (2) concurs with the IRS strategic plan's recognition that tax professionals play a key role in sustaining our voluntary compliance tax system. Further, we stressed that the IRS already has sufficient authority to regulate federal tax return preparers without the need for new legislation through the current penalty structure, Circular 230, and implementation of one unique identification number for all preparers (and all other tax practitioners) to track all interactions with the Service. Our statement also strongly advised against imposing duplicative regulatory processes on CPAs, attorneys, enrolled agents, and the other professionals already subject to Circular 230.

We applaud your efforts in soliciting input from a broad range of stakeholders regarding the Service's review of issues concerning tax return preparers. In the spirit of your efforts in this area, we are providing the following responses to the questions posed by Notice 2009-60.



1. What types of individuals, entities, and professionals currently work as tax return preparers? How are their tax return preparation services currently monitored or regulated by professional organizations or the government? How could this monitoring and regulation be improved?
CPAs practice in a variety of organizational forms including sole proprietorships, small local or regional partnerships, large regional firms and large national and international firms. Our members enjoy the confidence of an extraordinarily broad and diverse client base - from individual taxpayers with uncomplicated 1040 returns to large publicly traded partnerships and the world's largest multinational corporations. As a predicate to offering their professional tax return preparation services, CPAs must complete a specified course of academic study, pass a challenging multi-part examination including tax issues and professional ethics, and satisfy continuing professional education (CPE) requirements of the jurisdiction(s) in which they are licensed to practice. Furthermore, our members practice under the guidance, restrictions and disciplinary regimes defined in the AICPA Code of Professional Conduct, the AICPA Statements on Standards for Tax Services (SSTS), and in federal tax matters, Circular 230. In our view, CPAs are both sufficiently skilled and adequately overseen. Our members satisfy arduous educational, testing, licensing and CPE requirements of the CPA profession and they conduct their practices within the quality and ethical standards articulated by the Office of Professional Responsibility, state boards of accountancy, the AICPA and state CPA societies. As such, the overwhelming majority of CPAs serve the best interests of their clients as well as our voluntary compliance-based tax system, while those who fall short in those professional obligations are currently subject to serious Federal and state sanctions for non-compliance, including the potential for penalties, fines, and loss of professional licensure.



2. How do differences in regulation and oversight affect how the various groups of tax return preparers interact with the Service and taxpayers?
We believe that certified public accountants who offer federal tax services (and certain other tax practitioners including enrolled agents, and attorneys) are regulated under Circular 230. Through this oversight, CPA tax practitioners are subject to regulation and oversight both when they directly interact with the IRS and when they assist their clients - taxpayers - in interacting with the IRS. Examples of such interaction include tax return preparation, the IRS Practitioner Priority Service, IRS e-services, and representation of clients in connection with IRS examinations.

We believe all tax return preparers should be regulated under Circular 230; that is, all tax return preparers should be regulated and subject to the same sanctions. Circular 230 provides ethical and professional standards that protect the taxpayer when that taxpayer retains a tax return preparer who practices before the IRS to prepare his tax returns. These standards should apply not only to an enumerated category of Circular 230 practitioners, but to all tax return preparers.



3. Is there a minimum level of education and training necessary to provide tax return preparation services? If so, who should be responsible for ensuring that a tax return preparer meets this minimum level and how should that be done?
Section 56.02 of our Code of Professional Conduct provides that a CPA should not hold himself out to perform services that he is not competent or trained to perform. We strongly support the incorporation of this notion of competency into the regulation of all tax return preparers. In this context, taxpayers expect and need tax return preparers who are able to provide preparation services for returns ranging from simple to very complex returns. Many individuals are able to prepare their own returns but choose to use a tax return preparer, even though their return could be considered simple. In those cases, the return preparer, particularly one with access to commercial return preparation software, may be sufficiently aware of the relevant tax rules by reading and understanding the instructions to the return. On the other hand, preparation of a complex individual or business return requires significant training and experience regarding the tax law provisions that govern the issues found in such returns. Thus, in our view, the education and training that should be expected of a preparer is return specific.

We believe that no set of rules for minimum education and training will meet the diverse needs of taxpayers and preparers. Instead, each preparer should be responsible for ensuring that he has the level of education and training necessary to competently perform the preparation job for which he is engaged.



4. What, if any, service and outreach should be provided to tax return preparers and taxpayers? Who should provide (and bear the costs for) these needed services?
As stated previously, it is the responsibility of the preparer to be conversant with the tax law governing the issues in returns he or she prepares. CPAs have access to specialized information through many resources, including the AICPA and state CPA societies of which they are members. The AICPA regularly provides Tax E-Alerts, news updates, practice guides and checklists, and professional publications (e.g., the Journal of Accountancy and the Tax Adviser) to its members.

There are a number of existing information outlets available to both preparers and taxpayers, ranging from IRS press releases to the websites of the AICPA and other professional organizations. Much of this information is free and readily available to any taxpayer or tax return preparer. The IRS and Treasury Department should maintain the primary responsibility for taxpayer and tax preparer outreach; funding should be provided through the budgetary process, including the authorization of appropriate funding levels for the Office of Professional Responsibility.

We believe a meaningful component of the IRS's budgetary authority should be used to release public service announcements on how taxpayers can identify the proper, competent tax return preparer. In general, we are comfortable with the current level of outreach the IRS provides the public and applaud the special efforts of the IRS during the busy months of the tax return filing season. Moreover, the Service should provide a broad range of resources to preparers to ensure that information deemed important to the effective administration of the tax laws is well disseminated.



5. Should tax return preparers be subject to a code of ethics, and if so, what specific behavior should that code promote or prohibit? How would that code of ethics interact with existing ethical standards that may already be applicable?
The AICPA has developed and approved the Statements on Standards for Tax Services Nos. 1-8. These enforceable tax practice standards are in many ways conceptually similar to the scope of the Circular 230 standards. An excellent example is Circular 230 section 10.21 (knowledge of client's omission) and our current SSTS No. 6 (knowledge of error: return preparation). While Circular 230 section 10.21 states that a practitioner "must advise the client promptly of the fact of such noncompliance;" SSTS No 6, paragraph 5 states that a "member should inform the taxpayer promptly upon becoming aware of an error on a previously filed return."

We strongly support the SSTS and Circular 230, and we view these sets of enforceable standards as providing meaningful guidance to CPAs in performing their professional responsibilities with respect to tax services. As stated earlier in this submission, we believe the public would benefit from making all tax return preparers subject to Circular 230 and oversight by the IRS Office of Professional Responsibility.



6. What, if any, responsibility should the firms or businesses that employ tax return preparers have for the conduct of the individuals they employ?
Ultimately it is the individual's responsibility to comply with professional and legal standards. However, firms that employ individuals to prepare federal tax returns should require that employees satisfy the professional and legal standards imposed on federal tax return preparers, including compliance with practice standards sufficiently high so as to avoid employee exposure to penalties under sections 6694 and 6695. Firms should be able to rely on certification or confirmation by the employee that he or she is in compliance with professional and legal standards and, if the employee is a licensed CPA or other licensed professional, that the individual is in good standing with the state licensing authority.



7. What, if any responsibility should tax return preparer professional organizations have for the education, training, and conduct of their members?
Similar to our response to the immediately preceding question, we believe ultimately it is the individual's responsibility to comply with professional and legal standards. Nevertheless, the AICPA strongly supports implementation of high professional standards for all tax practitioners. Our longstanding track record regarding high professional standards for CPAs includes the AICPA Code of Professional Conduct and our enforceable Statements on Standards for Tax Services. These standards provide meaningful guidance to CPA members in performing their professional responsibilities. Moreover, the AICPA is committed to member service and the public interest. Today, the CPA is viewed as a valued strategic partner and is considered an integral part of any individual, family, or organization's success. We prepare members to assume that role by providing a broad array of continuing education programs, training, services, and publications CPAs need to keep their skills at the top professionally, and similar roles are played by state and local CPA societies throughout the United States.



8. If tax return preparation services should be regulated, what, if any, special regulatory provisions should be made for individuals who are already tax return preparers, licensed attorneys, certified public accountants, enrolled agents, or software providers?
Certified public accountants, attorneys, and enrolled agents who practice before the IRS are subject to the rules of Circular 230; and they are subject to a rigorous licensing examination to obtain their professional status. Upon achieving their professional designation, CPAs, attorneys, and enrolled agents are already subject to regulation and standards imposed upon them by state boards of accountancy, state bars, court systems, and Circular 230; and they generally are subject to annual continuing education requirements. These tax professionals incur significant costs in both obtaining and maintaining their professional status, including their ability to represent taxpayers before the IRS. We strongly advise against any result that would impose duplicative regimes on CPAs, attorneys, and enrolled agents.



9. What, if any, additional legislative, regulatory, or administrative rules should the Service consider recommending as part of its proposals with respect to the tax return preparer community?
The AICPA does not believe that any additional legislation or regulatory authority is required with respect to standards of practice for tax return preparers. Through the use of the current penalty regime combined with an expansion of the ability of the Office of Professional Responsibility to monitor currently unlicensed return preparers, the IRS has the authority necessary to regulate all federal tax return preparers.

The IRS adoption of a rule mandating the use of unique identification numbers assigned to all tax return preparers will allow the IRS to more readily identify those preparers that chose to practice outside the boundaries of the Internal Revenue Code.

The use of a unique identification number by each preparer must be accompanied by enforcement of preparer standards by the IRS. Unethical or negligent tax return preparers are subject to a broad range of penalties. Examples of these penalties include those for the understatement of tax liability (IRC 6694), the promotion of certain abusive tax shelters (IRC 6700), and the aiding and abetting of the understatement of tax liability (IRC 6701). Appropriate enforcement of these and other existing "preparer penalties" could be used to increase the ethics and quality of tax return preparers generally.

* * * * *

We thank you for the opportunity to provide these additional comments on issues concerning tax return preparers. We would be pleased to further discuss the contents of these comments with you or your staff at any time. If you have any questions, please contact me at (202) 879-4966, or aeinhorn@deloitte.com ; Danny R. Snow, Chair of the Federal Regulation of Tax Return Preparers Task Force, at (901) 685-5575, or dsnow@tdplc.com ; or Benson S. Goldstein, AICPA Senior Technical Manager, at (202) 434-9279, or bgoldstein@aicpa.org .

Sincerely,

Alan R. Einhorn

Chair, Tax Executive Committee

NAEA Letter Regarding Standards of Conduct for the Tax Return Preparer Community and Increased Taxpayer Compliance (Notice 2009-60)

National Association of Enrolled Agents (NAEA) Letter Regarding Standards of Conduct for the Tax Return Preparer Community and Increased Taxpayer Compliance (Notice 2009-60)

September 3, 2009

Internal Revenue Service : Tax Return Preparer Review Public Forum : National Association of Enrolled Agents (NAEA) letter : Notice 2009-60 : Standards of conduct : Increased taxpayer compliance .



By U.S. Mail and e-mail to notice.comments@irscounsel.treas.gov

August 31, 2009

Internal Revenue Service

CC:PA:LPD:PR (Notice 2009-60), Room 5203

P.O. Box 7604

Ben Franklin Station

Washington, DC 20044
Re: Standards of Conduct for the Tax Return Preparer Community and Increased Taxpayer Compliance (Notice 2009-60)

The National Association of Enrolled Agents (NAEA) appreciates the opportunities IRS has offered to provide input to the Service as it works to produce recommendations to increase return preparer accuracy and protect taxpayers from those who cannot or will not interpret Title 26 correctly. As the organization representing the interests of 46,000 enrolled agents, NAEA is well positioned to offer an informed and practical perspective about how to increase a taxpayer's confidence that his/her return preparer is producing a true, complete and accurate tax return.

Enrolled agents have for some time supported efforts --legislative, administrative, or both --to provide oversight to the widely unregulated tax preparer community. We are driven by the fundamental truth that Americans who pay a "professional" ought to get a professional return. As I write these comments, many Americans unfortunately cannot be reasonably assured that a given paid preparer will indeed produce an accurate return. Not to put too fine a point on it, enrolled agents believe that is wrong.

NAEA believes to protect taxpayers and the tax administration system federal policymakers should provide national standards for all paid return preparers and oversight of the entire community. NAEA's tenants are well known and while we included them in prepared comments given on July 30, 2009 by our past president and Government Relations Committee chair Frank Degen, EA, they bear repeating here:
 Competency: Taxpayers would have a reasonable expectation of competency if preparers are subject to initial testing, annual continuing education requirements, background checks, and strong ethical standards. The absence of an initial competency test could place taxpayers in a worse position than currently exists, as taxpayers will assume a preparer holding a federal license has at least demonstrated minimal competence i .

 Centralization: Any program should build on the existing regulatory framework and consolidate administration and enforcement under the Office of Professional Responsibility. Centralization would create a variety of benefits: a single ethics code; coordinated exams that would allow for advancement within the profession; and, standardized continuing education requirements all administered under the already existing system.


We strongly oppose the establishment of a separate IRS division to provide oversight to some but not all preparers or any type of quasi-governmental entity to oversee the newly regulated. Consolidation within the agency should ensure uniformity of standards and enforcement for all return preparers and necessary privacy for taxpayer information.

 Adequate resources: The most pragmatic element for any program is adequate resources for administration, promotion and enforcement ii . It is not unreasonable or unusual for professionals to pay for their licenses --attorneys pay for their licenses, certified public accountants pay for theirs, and EAs pay for theirs, too. OPR should retain all registration fees for administration of the program, including policing all practitioners and preparers under their jurisdiction.

NAEA urges IRS to remember that a rigorous oversight regime is not an end in and of itself. The point of the exercise should always be to protect taxpayers from the incompetent and corrupt.

Some in the tax arena have proposed preparer registration as a reasonable approach to increasing taxpayer confidence in paid preparers. NAEA remains concerned about providing each preparer with a unique identification number, not because it is a bad idea (it isn't) but because we don't want to see "a PTIN for every preparer" as the solution to our problem. We have waited too long for a serious discussion and for meaningful change. If the Service declares victory by assigning each preparer a PTIN (or EFIN, for that matter), it fails to provide taxpayers any assurance of competence, which is the sine qua non of regulation. A preparer number conceivably creates a world in which preparers lead taxpayers to believe the mere presence of a number indicates proficiency. A preparer number no more denotes competency than does years of preparation experience.

Amongst the reasons a central IRS authority responsible for return preparer behavior is desirable is that ethical, competent preparers will be assured of consistent oversight and that taxpayers and tax preparers alike will be assured of privacy and security of sensitive taxpayer information. Earlier this summer, however, the Service issued a contracting document asking a limited number of vendors to define, design, and stand up a self-regulatory organization (SRO). While we appreciate that the agency withdrew the request for quotation and that the agency's senior executives insist they have no preconceived solutions, we remain troubled by a SRO solution and that some in the agency may be biased in that direction. Enrolled agents are concerned that an SRO's enforcement ability will pale in comparison to IRS' enforcement ability (e.g., preparer penalties, court injunctions, etc.). Enrolled agents are also concerned that the disclosure issues (e.g. § 6103) raised by an external oversight body are significant.

We suggest that the strength of oversight program would be increased by creating an avenue by which preparers can report those who either are not signing returns or who are unwilling and/or unable to apply the tax code correctly. NAEA members report a significant amount of frustration in being unable to protect taxpayers by removing the proverbial "bad apples" from the barrel. The current return preparer complaint program, as the Treasury Inspector General for Tax Administration reported iii earlier this year, does not inspire confidence and must be improved significantly.

Providing a structure that requires paid preparers to demonstrate initial competency (and ongoing competency through continuing education) and that vests a central IRS authority with the resources necessary to provide discipline is critical. At the same time, to omit a strong public education program is to doom the enterprise. Taxpayers will of course remain responsible for the accuracy of their returns. In all likelihood, they will in practice continue to rely heavily on their return preparers. Taxpayers, however, must understand the license held by their preparer (i.e., which returns a preparer is permitted to complete) and need to be informed of the simple ground rules. To wit, a paid preparer must:
 demonstrate (s)he is either a Circular 230 practitioner or a newly regulated preparer; and,

 sign any return (s)he is paid to prepare.

Finally, NAEA suggests that the new examination must be given considerable thought. This examination will be the hurdle all preparers must clear in order to prepare the basic returns filed by millions of Americans. To be clear, we do not for a moment believe the examination need be as comprehensive as the examinations passed by Circular 230 practitioners. While we leave specific content to IRS, we believe the test must at a minimum require the preparer to demonstrate competency in fundamental tax calculation issues (e.g., earned income tax credit, child care credit, education credits, basis, and mortgage interest iv ). The examination should be the responsibility of IRS to create and administer, much as the special enrollment examination is.

A meaningful oversight regime presents the Service with a significant opportunity both to increase tax compliance and to level the playing field for all paid preparers. Bringing order to the paid preparer universe is not a trivial undertaking. The preparer community will need to demonstrate patience during what could be a lengthy transition period. The IRS will need to be vigilant and guard against the temptation to make decisions based on what is expedient for the agency (or for preparers) rather than on what is right for taxpayers.

In closing, we offer the following practical suggestion: when the dust settles, the sheriff needs to be back in town and taxpayers must be reasonably assured that their paid preparer is competent and ethical.

NAEA appreciates the opportunity to submit comments on Notice 2009-60, return preparer standards of conduct. Should you seek further clarification or explanation of our positions, please contact NAEA's Senior Director, Government Relations, Robert Kerr, at (202) 822-6232.

Sincerely,

Sandra Martin, EA

President

cc: Douglas Shulman, Commissioner, Internal Revenue Service
Karen Hawkins, Director, Office of Professional Responsibility

Mark Ernst, Deputy Commissioner for Operations Support

i As the Governmental Accountability Office has recently found in one of its tax preparer audits, a well constructed oversight program can result in higher compliance rates, but a weak program without an initial competency exam can actually result in lower compliance than the national average. See GAO-08-781 , "Oregon's Regulatory Regime May Lead to Improved Federal Tax Return Accuracy and Provides a Possible Model for National Regulation."

ii Given the current budget environment, dollars should come from paid preparers, not from the fisc.

iii "The Process Taxpayers Must Use to Report Complaints Against Tax Return Preparers is Ineffective and Causes Unnecessary Taxpayer Burden"

( http://www.treas.gov/tiata/auditreports/2009reports/200940032fr.pdf) February 24, 2009 (Reference no. 2009-40-032)

iv The new Schedule L ( "Standard Deduction for Certain Filers" ) and Schedule M ( "Making Work Pay and Government Retiree Credits" ) would also clearly fall in the category of fundamental tax calculation issues. See the August 28, 2009 Forbes piece by Janet Novak, "Tax Time Torture Worsens."

Statement of Celeste H. Heritage, California Tax Education Council

Statement of Celeste H. Heritage, California Tax Education Council

September 3, 2009

Internal Revenue Service : Tax Return Preparer Review Public Forum : Statement of Celeste H. Heritage, California Tax Education Council .


Statement of Celeste H. Heritage



California Tax Education Council


My name is Celeste Heritage and I am a Vice President with Advocation, Inc., a legislative advocacy and association management firm based in Sacramento, California. I am here on behalf of the California Tax Education Council (CTEC). Having administered the CTEC program for the last 13 years, I would like to take this opportunity to thank the IRS and all other parties involved with this forum for the opportunity to be here and share our views and experiences regarding our program.

In 1997 a law was passed which transferred the responsibility for approving tax schools and certifying the education of tax preparers in the state of California from the Tax Preparer Program in the Department of Consumer Affairs to CTEC, which is a non-profit corporation. CTEC regulates any person who, for a fee, assists with or prepares tax returns for another person. CPAs who are licensed by the California Board of Accountancy, EAs, attorneys who are active members of the State Bar of California, and employees of these entities are all exempt from the law. At the time of the transfer, there were approximately 27,000 registered preparers in the state. Each year our registration numbers have increased to the point where we currently have over 44,000 registered preparers.

CTEC Registered Tax Preparers (CRTPs) are required to take an initial 60 hours of education from a CTEC approved provider and 20 hours of continuing education annually to remain in compliance. CRTPs are also required to carry a $5,000 tax preparer surety bond.

CTEC not only registers preparers, it also approves tax education schools. These schools go through an extensive review process by staff, as well as a thorough curriculum review by tax school academicians. Every three years an approved provider is required to have their materials re-reviewed. Currently, CTEC has approximately 125 approved schools.

In order to register with CTEC, an individual is not required to take a standardized test. However, education providers are required to administer a final examination for all students taking the 60-hour course by distance learning. Although most providers do administer a final examination for instructor-led (classroom) courses, such in-class exams will not be mandatory until 2010. This same procedure could be used for a national registration program. Rather than a standardized test and testing centers, individuals could be required to take a final exam given by the education provider. This exam could be a standardized test (various versions) developed by the IRS and given to providers for their use.

In considering a national program, the imposition of an upfront entrance exam could cause serious harm to the livelihoods of those preparers unable to pass the exam. Some individuals simply are not good test takers. CTEC believes it would be better to initially register all unlicensed preparers, collect the registration fees to fund the program, and impose an annual continuing education requirement on all registrants. This is with the expectation that after two or three years those individuals would be required to take and pass a standardized test to retain their registration. This approach would be less likely to drive preparers underground and get most on the radar screen upfront.

There is also some concern that a Federal program might follow Circular 230 and limit CPE to Federal tax issues only. CTEC believes it is essential that California tax preparers have education in the tax laws of California. Thus, CTEC's 20-hour annual continuing education requirement includes 4 hours of California education. CTEC also believes that the Circular 230 ethics requirement should be included for all tax preparers.

Since its inception in 1997, no government money has ever been spent on the administration of the CTEC program. It is entirely funded from the annual registration fees (currently $25.00), late registration fees (currently $13), provider review fees (between $500 and $1,000) and the sale of CTEC merchandise (mailing lists, brochures, posters, etc.). The fees are used primarily to fund administration of the program, education provider reviews, enforcement and public awareness. Essential to the success of the CTEC program has been the development of a state-of-the-art computer system. During the 2008/2009 registration cycle, over 30,000 preparers registered online. Unlike the manual random auditing of selected CPAs and EAs, CTEC verifies the education compliance of every preparer prior to their initial registration or subsequent annual renewal registration. This is accomplished by mandatory online tax school reporting. Each approved provider is required to verify electronically their students' education with CTEC. To assist providers with this process, a barcode procedure was developed whereby each preparer receives an ID card with a barcode on it. This barcode can then be scanned at the time of the class and used by the provider to simplify the electronic sending of information. The system also allows preparers to view their educational records and find schools where they can take their education. Due to this automation, CTEC is able to administer the program with a staff of only three full-time people.

One of the most important responsibilities undertaken by CTEC is to educate California taxpayers on the selection process of a tax professional. Most years, between $150,000 and $200,000 of the CTEC budget is allocated for paid advertising throughout the state for this purpose. Thousands of dollars in free advertising (PSAs and media interviews) is also utilized to get the message out. Brochures, posters, and attendance at tax practitioner events also help convey to the public the importance of selecting a registered tax preparer.

The key to any law is enforcement. For this reason, CTEC, for the last six years, has partnered with the California Franchise Tax Board to provide the needed enforcement arm of the program. Currently, CTEC is paying $350,000 annually to the FTB for this service. In return, the FTB Fraud Unit investigators are out in the field identifying and fining illegal preparers.

Finally, a question that is frequently asked, "Because of the Tax Preparer Act and the regulations imposed on tax preparers, are tax returns prepared more accurately in California then in states that do not have such laws?" We have looked for statistical data that could be used to validate whether any group of preparers does a better job of preparation than another. Unfortunately, it would appear that there is no data publicly available. Thus, it seems completely illogical that a tax preparer who has had no education at all would be a better option for California consumers than a preparer who has completed 60 hours of qualifying education and maintains 20 hours of continuing education annually.

Talking Points of Wallace A. Eddleman, Comptroller's Office of Maryland

Talking Points of Wallace A. Eddleman, Comptroller's Office of Maryland

September 3, 2009

Internal Revenue Service : Tax Return Preparer Review Public Forum : Talking points of Wallace A. Eddleman, Comptroller's Office of Maryland .


Talking Points of Wallace A. Eddleman



Comptroller's Office of Maryland

 Last year, the Comptroller's Office received more than 1.3 million tax returns prepared by paid tax preparers.

 It's safe to bet that the majority of those who use paid tax preparers believed that they were using qualified, certified and registered professionals.

 Unfortunately, they would be mistaken.

 While Maryland tax attorneys, CPA's and enrolled agents who prepare tax returns are licensed, there are many people advertising themselves as tax preparers who are not.

 In the past, anyone could call themselves a tax preparer - whether they were qualified or not.

 And in many cases, these people are definitely not qualified.

 The Comptroller's Office sees firsthand the problems that result from returns prepared by individuals who are, at best, uneducated in the tax area, and, at worst, intentionally deceiving people.

 In many instances, these people promise large refunds and fraudulently complete a taxpayer's return - all while charging exorbitant fees for these shady and unregulated services.

 The result is thousands of taxpayers being hit with high fees and faulty returns being left alone to navigate the confusing and intimidating landscape of tax law.

 They are sold financial products, such as Refund Anticipation Loans, based on their falsely inflated refunds - and are stuck further in debt and forced to pay exorbitant interest rates and fees.

 This type of predatory behavior is of great concern to the Comptroller, and he believes the Maryland Tax Preparers Act is a big step in the right direction.

 This pro-consumer measure helps protect taxpayers against unscrupulous tax preparers.

 It gives the state a method of tracking problem preparers.

 And most importantly, it protects taxpayers from fraudulent and misleading marketing schemes that target the most vulnerable taxpayers in Maryland.

 The eight-person regulatory board created by the law provides a mechanism for ensuring that individuals holding themselves out as tax preparers have the requisite knowledge to prepare a basic tax return.

 The law mandates all professional preparers must be licensed by 2010.

 Preparers with less than 15 years experience must pass an examination with "no less stringent standards" than the special enrollment agents' exam.

 The license is renewed every two years subject to 16 hours of continuing education.

 This law also increases the accountability of tax preparers, because it requires them to sign each return they prepare - holding them responsible for their work.

 Tax preparers are now subject to criminal and civil penalties including up to a $5,000 per violation.

 Additionally, taxpayers can bring civil action against fraudulent preparers themselves under this law.

 Marylanders deserve the highest quality tax preparation services possible and they deserve to be protected from fraudulent preparers who seek only to enrich themselves at the expense of working families and from individuals who hold themselves out as preparers, but lack the skills necessary to prepare a complete and accurate return.

 This law makes it clear that Maryland will no longer allow this kind of deceitful business practice.

 The Comptroller supports any federal legislation or mandates that protect the consumer through licensing and oversight.

 In fact, one of his senior staff is currently assisting with the formulation of Maryland's tax preparer's oversight board.

 The board hopes to be up and running by 2010.

 I'll take any questions now...


Statement of Jamie Woodward, New York Department of Taxation and Finance

Statement of Jamie Woodward, New York Department of Taxation and Finance

September 3, 2009

Internal Revenue Service : Tax Return Preparer Review Public Forum : Statement of Jamie Woodward, New York Department of Taxation and Finance .


Statement of Jamie Woodward



New York Department of Taxation and Finance


Thank you for the opportunity to appear before you today. I am Jamie Woodward, Acting Commissioner of the New York State Department of Taxation and Finance. First, I want to express to the IRS the support and enthusiasm that I and my colleagues in tax administration in New York have as the agency takes steps to secure long-overdue regulation of the tax return preparer industry.

In recent years, we in New York observed that the tax preparation field was fast becoming a lucrative market for unscrupulous individuals - many with absolutely no background or experience in taxation. Anyone in New York, regardless of education, experience, training, or even criminal history, can call themselves a preparer and charge the public for the services they provide. Nearly 60% of New York personal income tax returns are prepared with the assistance of someone who is paid for the service. These preparers are uniquely situated to influence taxpayer behavior and become a powerful force behind taxpayers' decisions to voluntarily comply with tax laws or, conversely, to commit tax fraud and other criminal acts. Yet there are no state or national standards under which these individuals and businesses operate.

In New York, we are in the first stages of developing minimum qualifications and standards for this industry and we look forward to working with our colleagues at the IRS to effect meaningful change. Just this past year, Governor Paterson and our Legislature directed my Department to begin to register tax preparers who are not otherwise regulated as licensed accountants or attorneys. The legislation also directs the Tax Commissioner to chair a task force of government and industry representatives, including the IRS, and to make recommendations for minimum education and licensing standards for all tax preparers operating in New York. We are actively organizing this task force now; its findings and recommendations are due to our Legislature by 2012. In response to what appeared to be a growing culture of creative tax avoidance fueled by unscrupulous tax preparers, our Department in recent years has devoted significant resources to investigating and prosecuting these preparers. To get a clear view of the extent of the problem, we borrowed investigative techniques more commonly used in rackets investigations - we went undercover. In less than two years, we conducted nearly two hundred covert operations in which our agents posed as taxpayers seeking to hire tax professionals to prepare income or sales tax returns. While our selection of preparers would not be considered random in the scientific sense, we did attempt to select preparers from across a broad spectrum of the community.

Our findings revealed an epidemic of unethical and criminal behavior by these tax preparers. In the 20 months since we began this project we arrested more than 20 preparers and secured 13 convictions. Of course, our investigations are continuing and additional arrests are anticipated. Many of the preparers in our ongoing investigations are cooperating and providing evidence against their clients and others.

Our investigation uncovered fraud by preparers of all types, from store-front operations to licensed, professional CPAs. All used their knowledge of the tax law and tax administration to operate as fraud coaches to help our undercover agents cheat without getting caught. There was nothing subtle about these preparers' sales pitches or their instructions. One told us he was going to give us an "education" in how to hide our money without getting caught. Another said he specialized in preparing "plain vanilla" returns: where taxpayers can cheat without triggering an audit. Many of them told us that we wouldn't get caught if we didn't file and, when we decided to file anyway, they coached us to evade taxes by hiding or destroying our business records, creating new or false records, or by hiding our cash, lying about our income or inflating and creating our expenses.

The returns these preparers created fully reflected their willingness to cheat and encourage others to cheat. All appeared to promote the concept that the calculated risk to cheating was low and full compliance was optional. One preparer suggested that we could get away with reporting only one-tenth of our income. Another - - a CPA - - gave us a choice of paying 25% of the tax we owed, 50%, 75%, or the full tax. One joked that he would use his "magic pencil" to create a false return, and several preparers told us that we could get away with reporting only our credit card sales and not to report any cash transactions on sales tax returns.

In addition to investigating preparers who are fraud coaches, we are also investigating tax preparers who run or facilitate refund mills. These operations create and file thousands of fictional tax returns each year, often taking advantage of less educated, unsuspecting taxpayers and putting them at risk. Our investigators, working with the IRS, have uncovered preparers who "sell" dependents, create and/or steal identities, and then forge documents to escape detection on audit. Through the use of predictive modeling and other audit selection tools, we have been able to identify questionable preparers whose returns we monitor and screen very carefully. Not only has this saved New York taxpayers hundreds of millions of dollars in fraudulent refunds we denied, but it has also helped us initiate criminal investigations and prosecute unscrupulous preparers as a result.

New York recognizes the need to bring oversight to the preparer industry and, as I mentioned, we are starting a registration process. Understanding the states' perspectives and providing a national structure of minimum requirements will go a long way to protect both state and federal revenues and the taxpaying public. It will also head off any potential patchwork that could result if states seek individual solutions. All consumers across the country - - consumers who seek to comply with state and federal tax laws - - deserve the knowledge that our tax preparers are trained and educated in their field.

As to our specific suggestions regarding the development of a national program to regulate the preparer community, I offer the following.

First, we strongly suggest that the IRS register all tax preparers, including CPAs and attorneys. Each preparer should be given a unique registration/license number and pertinent registration information (name, address, registration/license number) should be made public. Further, the IRS should promote data matching and information sharing with and between States regarding investigations or concerns regarding incompetent or unscrupulous preparers. Minimum competency standards should be developed and thought given to requiring continuing education.

Consideration should be given to regulating the terms of refund anticipation loans through the regulation of the preparers themselves. Finally, and perhaps the most difficult, a public education campaign as to the importance of dealing with a reputable preparer is essential.

Whether through enforcement actions or cooperation in creating a much-needed regulatory scheme, New York State stands ready to work with the federal government to achieve meaningful oversight of the tax preparation industry.

Thank you.

Talking Points of Ron Wagner, Executive Director Oregon State Board of Tax Practitioners

Talking Points of Ron Wagner, Executive Director Oregon State Board of Tax Practitioners

September 3, 2009

Internal Revenue Service : Tax Return Preparer Review Public Forum : Talking points of Ron Wagner, Executive Director Oregon State Board of Tax Practitioners .


Talking Points of Ron Wagner, Executive Director Oregon State Board of Tax Practitioners


ron.a.wagner@state.or.us

Our Mission: The Oregon State Board of Tax Practitioners works to protect consumers by ensuring that Oregon tax professionals are competent and ethical in their professional activities.



1. History of Oregon Board of Tax Practitioners
 What were the primary reasons the state felt it necessary to develop its own paid preparer regulatory program?


In 1972, because of an IRS shopping test in which IRS agents posed as taxpayers, a newspaper article appeared nationwide stating that 97% of tax practitioners were either incompetent or dishonest. Many tax practitioners disliked the disparaging publicity and negative reflection on the tax preparation industry. They decided to take action.



2. Who do we regulate?
 Any person who prepares or advises or assists in the preparation of personal income tax returns for another and for valuable consideration or advertises in Oregon to do so. (ORS 673.615)

 Excludes:

i. CPA or PA and their employees.

ii. Attorneys at law.

iii. Full or part-time employees of a business who prepare the income tax return for the business.

iv. Tax practitioners who prepare or advise or assist with the preparation of Oregon income tax returns while outside Oregon.



3. Licensing requirements

For Licensed Tax Preparer:
 Meet the qualifications to qualify to take the exam.

 Pass the board administered exam - minimum 75% test score.

 Complete tax preparer initial application and pay appropriate fees.

For Licensed Tax Consultant:
 Meet the qualifications to take the consultant exam.

 Pass the board administered exam - minimum 75% test score.

 Complete the tax consultant application and pay appropriate fees.

 If an EA comes into Oregon must pass the State only portion of Licensed Tax Consultant exam



4. Ongoing qualifications -
 Obtain minimum of 30 hours of continuing education each year.

 Maintain professional standards and state ethics.

 File annual licensing renewal form and pay appropriate fees.



5. What was done right?
 Created two levels of licensure.

 Board is currently self-supporting. The Board receives NO state general fund dollars.

 Regulation at the local level.

 Took action.



6. If we had the opportunity to do it all over again what would we do differently?
 Require a specific number of continuing education hours each year must be on tax law update.

 Not allow grandfathering but require all tax practitioners to show competency of tax law.

Recommendations to increase taxpayer compliance and ensure uniform and high ethical standards of conduct for tax preparers:

Consumer Protection
 Competency must be proven - Oregon's model of 2 levels has been extremely successful.

 Continuing Education Requirements.

 Compliance.

 Code of professional conduct.

 Consumer education.

 Coordinated by local jurisdictions.
Notice 2009-60 , I.R.B. 2009-32, July 24, 2009.

[ Code Sec. 7701]


Internal Revenue Service: Preparers of returns: Public comment: Development of return preparer standards. --
The IRS is seeking comments from taxpayers on how to ensure that return preparers meet both uniform and high ethical standards of conduct and how the return preparer industry can help increase taxpayer compliance. These comments will assist the IRS in developing a comprehensive set of recommendations on return preparer performance standards by the end of 2009. Back reference: ¶43,114.20.





PURPOSE

This notice invites public comments regarding the Internal Revenue Service's review of issues concerning tax return preparers. In June 2009, the Service announced plans to propose a comprehensive set of recommendations by the end of 2009 regarding how the tax return preparer community can help increase taxpayer compliance and how to ensure that tax return preparers meet both uniform and high ethical standards of conduct. See IR-2009-57 (June 4, 2009). The Service is seeking the input of tax preparers, the associated industry, consumer groups, and taxpayers before any recommendations are made.

To assist in developing its proposals and to ensure that input is received from a broad range of stakeholders, the Service has scheduled a number of meetings in Washington, D.C., and around the country with constituent groups. See IR-2009-66 (July 14, 2009). In this Notice, the Service is requesting written comments from all affected persons and entities. The information collected will assist the Service in drafting recommendations.



REQUESTS FOR PUBLIC COMMENT

The Service requests comments on 1) how the tax return preparer community can assist in increasing taxpayer compliance and 2) how to ensure that tax return preparers meet both uniform and high ethical standards of conduct. The Service is particularly interested in any comments regarding:
 What types of individuals, entities, and professionals currently work as tax return preparers? How are their tax return preparation services currently monitored or regulated by professional organizations or the government? How could this monitoring and regulation be improved?

 How do difference in regulation and oversight affect how the various groups of tax return preparers interact with the Service and taxpayers?

 Is there a minimum level of education and training necessary to provide tax return preparation services? If so, who should be responsible for ensuring that a tax return preparer meets this minimum level and how should that be done?

 What, if any, service and outreach should be provided to tax return preparers and taxpayers? Who should provide (and bear the costs for) these needed services?

 Should tax return preparers be subject to a code of ethics, and, if so, what specific behavior should that code promote or prohibit? How would that code of ethics interact with existing ethical standards that may already be applicable?

 What, if any, responsibility should the firms or businesses that employ tax return preparers have for the conduct of the individuals they employ?

 What, if any, responsibility should tax return preparer professional organizations have for the education, training, and conduct of their members?

 If tax return preparation services should be regulated, what, if any, special regulatory provisions should be made for individuals who are already tax return preparers, licensed attorneys, certified public accountants, enrolled agents, or software providers?

 What, if any, additional legislative, regulatory, or administrative rules should the Service consider recommending as part of its proposals with respect to the tax return preparer community?

Written comments should be sent to: CCPA:LPD:PR ( Notice 2009-60), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044. Alternatively, comments may be hand delivered between the hours of 8:00 a.m. and 4:00 p.m. Monday to Friday to CC:PA:LPD:PR ( Notice 2009-60), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, D.C. Comments may also be transmitted electronically via the following e-mail address: Notice.Comments@irscounsel.treas.gov. Please include "Notice 2009-60" in the subject line of any electronic communications.

All comments will be available for public inspection and copying.

Because the Service intends to make recommendations by December 31, 2009, comments, if any, must be received by August 31, 2009.



DRAFTING INFORMATION

The principal author of this notice is Richard S. Goldstein of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this notice contact Richard S. Goldstein at (202) 622-3400 (not a toll-free call).