Saturday, January 30, 2010

IRS '10,000 Letters' Program Angers CPAs

No kidding:
CPAs are complaining about an intrusive and intimidating Internal Revenue Service (IRS) initiative that began in early January when the IRS started sending “over 10,000” letters to tax return preparers (commercial and professional), with follow-up visits to “thousands” of letter recipients. This is part of an IRS program to be sure that preparers are “assisting clients appropriately” and part of Commissioner Shulman’s overall effort to increase oversight of return preparers. The IRS may intend this as an encouragement to do a better job, but CPA practitioners see this as poorly timed and intimidating during the busy tax season as they seek to apply the tax law correctly to client situations.

No, the IRS doesn't see this as encouragement; that's only the lipstick they put on this pig, the thing they tell themselves as they pat themselves on the back and give each other performance awards for coming up with such a brilliant scheme of harassment and intimidation. As always, the IRS' focus is on the those who are in compliance, and why not? The IRS already has the compliant right where they want them: filing tax returns, paying taxes, duly reporting the returns for which they were paid to prepare. It's too much trouble, and too expensive, to put together a task force to root out and discipline those who aren't in compliance. Better to send out letters and visit offices - in the middle of filing season! - and talk in general terms about "errors" - codespeak for intentional fraud and said with a smile - found on the returns of other preparers. They're like the mob, visiting a business: nice little tax practice you've got here. It'd be a shame if anything should happen to it.

CPAs go through a rigorous training program and examination to be licensed, as well as an extensive continuing education program. Further, they're subject to stringent ethical requirements to maintain their license. Sure, there are lots of bad CPAs, just like there are lots of bad attorneys and bad doctors; the certification process isn't perfect. But the greatest number of tax returns that are being prepared erroneously - whether intentionally or not - aren't being prepared by CPAs. (And what's a correctly prepared tax return anyway? Look for the inevitable stories this filing season of the accuracy rate of the IRS' own help hotline; they'll seldom give you the same answer twice. The Internal Revenue Code is a vast and complicated piece of legislation, open to a great number of interpretations. Even the IRS doesn't know what it means. They don't win every case in Tax Court.)

If the IRS knows enough about CPAs to send out letters and make office visits, I say formalize your charges and bring 'em forward. Otherwise, stop this nonsense. You don't see the Department of Justice sending letters or making visits to attorney offices "encouraging" attorneys to argue more "accurate" cases. The IRS has no business doing the same with CPAs.

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