As expected, the IRS has announced a new voluntary version of the tax preparer certification program. The new version, dubbed the “Annual Filing Season Program” or AFSP, will allow unenrolled return preparers to get a record of completion if they voluntarily undergo a required amount of continuing education, including a course in basic tax filing issues and updates, ethics and other federal tax law courses, the IRS said in a news release.
The IRS provided more information on the AFSP on June 30 in Revenue Procedure 2014-42 (available here), which provided the following information:
- Preparers who are not attorneys, certified public accountants, or enrolled agents and who choose to engage in the annual filing season program must have a PTIN and must apply by using the online preparer tax identification number application system;
- Only applicants who successfully complete an annual federal tax filing season refresher course that is administered by an IRS-approved continuing education provider (note that NSA is an IRS-approved provider) are eligible to participate in the Annual Filing Season Program. The refresher course must generally cover tax law and filing requirements relevant to Form 1040 series returns and schedules. The refresher course must be 6 hours and must include a test of the material with a minimum of 100 questions. To successfully complete the refresher course, the applicant must pass the test by answering 70% of the questions correctly (or a higher percentage if set forth in forms, instructions, or other appropriate guidance);
- As part of the transition to this program, applicants for the AFSP for the 2015 calendar year are required to complete 11 hours of continuing education during 2014. For applicants who must complete the refresher course, the refresher course will satisfy 6 hours of the 11-hour requirement; the other 5 hours must consist of 3 hours of federal tax law topics and 2 hours of ethics or professional responsibility. Applicants not required to take the refresher course must complete 8 hours of continuing education consisting of 3 hours of federal tax law updates, 3 hours of federal tax law topics, and 2 hours of ethics or professional responsibility.
- As a prerequisite to participation in the AFSP and receiving a Record of Completion, an applicant must consent to be subject to the duties and restrictions relating to practice before the IRS in subpart B and section 10.51 of Circular 230 for the entire period covered by the Record of Completion.
- Revenue Procedure 81-38 is modified and superseded for tax returns and claims for refund prepared and signed (or prepared if there is no signature space on the form) after December 31, 2015. Unenrolled tax return preparers may not rely on Revenue Procedure 81-38 to represent taxpayers during an examination of a tax return or claim for refund prepared or signed after December 31, 2015. However, unenrolled tax return preparers may rely on Revenue Procedure 81-38 to represent taxpayers during an examination of a tax return or claim for refund prepared and signed (or prepared if there is no signature space on the form) on or before December 31, 2015.
- The IRS is also developing a database of qualified tax return preparers that will be available on the IRS website by January 2015. The database will include the unregulated preparers who choose to participate in the voluntary education program and will also include attorneys, certified public accountants, and EAs.
Readers should note that:
- The IRS will exempt from taking the annual refresher course and annual testing those preparers who have taken and passed an ACAT test as well as certain other examinations, including the RTRP test and the test offered to preparers in the State of Oregon.
- NSA is an approved IRS Course Provider and will be providing an online tax refresher course and test that will satisfy the IRS AFSP requirements.
Preparers who volunteer for the AFSP and receive a Record of Completion may not use the term “certified,” “enrolled,” or “licensed” to describe this designation. NSA is fully in support of this restriction as a way to differentiate CPAs and EAs who have undergone a significantly more rigorous regimen for their credential.
The voluntary program is a temporary substitute for testing and continuing education components of the mandatory program that the U.S. District Court for the District of Columbia threw out in Loving v. IRS, according to IRS Commissioner Koskinen. “I say temporary only because we have been urging Congress to enact a proposal in the president's fiscal year 2015 budget that would clearly give us the authority for mandatory oversight of return preparers,” Koskinen said.
Koskinen also acknowledged that the AICPA opposed the AFSP because the group believes it is unlawful. However, Koskinen said after consulting with the IRS Office of Chief Counsel and Treasury counsel that the IRS is comfortable it has the legal authority to proceed.
