So here’s the latest we’ve gathered about the progress of this Annual Filing Season program started by IRS in a renewed effort to regulate tax preparers, or to allow tax preparers to “voluntarily” regulate themselves by participating.
As we mentioned on our last webinar, IRS has been careful to call the AFS program “temporary” and “voluntary” but they hope to be able to institute a more formal program soon enough.
The American Institute of CPAs (AICPA) wasted no time asking the U.S. District Court to make IRS pump its brakes on the new initiative. According to AICPA- reminiscent of the issues raised against IRS’s Registered Tax Return Preparer (RTRP), which was halted last year, the AICPA’s suit describes the AFS as “unlawful” and “improper”. The basic idea is that AICPA asserts that -regardless of how IRS describes it- IAFS is an overreach of IRS’s powers and it has overstepped its bounds by trying to police tax preparers.
IRS’s anticipated defense of the program is that it’s voluntary for EROs to participate, but in response, AICPA says the following: “Faced with the prospect of not participating and losing business, tax return preparers will “choose” to comply.” AICPA claims that IRS makes it clear that the “rule is mandatory as a practical matter” and thus, the program “achieves substantially the same outcome” as the rule invalidated in Loving v. IRS, the case against the RTRP program.
Under the AFS program, preparers who take courses, pass an exam and complete annual continuing education requirements will be listed in a database on IRS’s website, and taxpayers presumably will be encouraged to choose their preparer from those listed as AFS participants.
At the very core, AICPA’s complaint is asking that the court stop IRS from implementing AFS for this coming filing season altogether, and postpone any further steps toward developing the program until the matter is completely resolved. The alternative, of course, is that IRS halts the AFS program, but IRS does not seem to have any intentions of changing its direction in the near future.
Understandably, the immediate concern of tax preparers is a repeat of the RTRP debacle of 2 years ago, in which time and money were invested in compliance with the initiative, only to have the program halted and RTRP credentials deemed essentially useless.
While it’s tough to predict the results of the debate, you can count on the Refundo team to continue to monitor the progress of the case and let you know what we find out!