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August 26, 2011
Mr. David R. Williams
Director, Return Preparer Office Internal Revenue Service
1111 Constitution Avenue, Northwest Washington, District of Columbia 20224
Re: Registered tax return preparer credential advertisement
Dear David,
I write on behalf of the National Association of Enrolled Agents (NAEA), which represents the interests of some 43,000 enrolled agents, on an issue of great importance to EAs—the oversight of paid tax return preparers. More specifically, we are concerned about the Service’s efforts to enforce rules with respect to the promotion of the new preparer credential, registered tax return preparer.
We have for some time been broadly concerned the newly-created credential will be promoted in a fashion that is confusing in the marketplace (my predecessor, in fact, referenced this very issue in a March 31 letter to Commissioner Shulman regarding credential tiering). Recently, though, we became aware of a new organization both promoting registered tax return preparers in a misleading fashion and offering a registered tax return preparer lookup feature.
The directory appears to run afoul of both Notice 2011-45 and Circular 230. Notice 2011- 45 states, "Because the conditions for becoming a registered tax return preparer are not yet able to be satisfied by any individual, no individual may represent that he is a registered tax return preparer." Circular 230 states:
A practitioner may not, with respect to any Internal Revenue Service matter, in any way use or participate in the use of any form of public communication or private solicitation containing a false, fraudulent, or coercive statement or claim; or a misleading or deceptive statement or claim. [§ 10.30(a)(1)]
I understand both Notice 2011-45 and Circular 230 prohibit actions by individuals. I would be surprised if IRS defined those prohibitions so narrowly as to green-light deceptive statements by an organization. Further, even if IRS did make such a fine distinction, it shouldn't be unreasonable to conclude that the individuals who appear on the results of any query (e.g., this list of registered tax return preparers in New York) are holding themselves out as registered tax return preparers both in direct violation of Notice 2011-45 and in violation of Circular 230 § 10.30(a)(1).
I also understand the association in question states--though not particularly clearly--the lookup feature is a directory of association members. In my opinion this is an exercise in hair-splitting because the overall impression, particularly in context of the description of what registered tax return preparers are and other statements on the page (e.g., "To find a trusted and competent RTRP in your area..."), is that registered tax return preparers exist, which they of course do not.
Finally, we are troubled by the organization’s description of the new credential: “Each RTRP is distinguished by stringent requirements. RTRPs have extensive tax knowledge, skills, experience, and ethics. In order to qualify for the RTRP accreditation, RTRP’s (sic) must possess tax education, pass the IRS’s national RTRP exam, meet experience requirements...”
While I’m not sure where to begin in deconstructing that definition, allow me to contrast its assertion of “extensive tax knowledge” with public statements from the RPO that the new registered tax return preparer test is going to be “basic.” Further than that, the definition is replete with hyperbole, half truths and outright falsehood. The crux of the issue, however, is general: we believe the entire oversight program is weakened when such misleading statements are left unchallenged.
Before I close, I would like to state clearly that I do not single out this particular group to be petty or malicious. As a matter of fact, we have no opinion one way or the other on this organization. The behavior of this particular organization, however, is deeply concerning and offers a concrete example of our fundamental problem: taxpayers are going to be faced with an array of false and/or misleading advertisement.
I understand that the task you face in bringing online such a significant new program must be at times daunting and I applaud you for your efforts thus far, including your recent address at NAEA’s National Conference at which I can assure you that you were wildly popular. Nonetheless, enrolled agents strongly urge you to take prompt, decisive action (as publicly as possible) against those who flagrantly violate rules on marketing. It is the right thing to do. It will send the right message to enrolled agents and other legacy Circular 230 practitioners.
As always, we look forward to continuing to work with you on creating a common sense, rigorous regulatory framework that protects all taxpayers, levels the industry playing field, and produces more accurate tax returns.
Sincerely,
Sherrill L. Trovato, EA, USTCP President
cc: Steven Miller, Deputy Commissioner for Services and Enforcement Karen Hawkins, Director, Office of Professional Responsibility