Senator Rob Portman (R-Ohio) has introduced a bill that tweaks the federal tax code and allows enrolled agents more discretion in using their credentials to distinguish themselves from unlicensed tax preparers.
Portman said he introduced the Enrolled Agents Credential Act to ensure that individuals and businesses are able to identify and have access to trained specialists when filing their federal taxes. He said some state statutes prevent enrolled agents from identifying themselves as credentialed by the treasury department.
The bill amends the Internal Revenue Code of 1986.
Michael Fioritto, an enrolled agent and certified public accountant with a practice in the City of Oregon, said the bill is a step forward in professionalizing the tax preparation industry.
“By interfering with enrolled agents’ ability to advertise and brand themselves, a few states are hurting not only the enrolled agent profession but the consumers in those states who might utilize their services,” he said
Fioritto is also the president of the Ohio State Society of Enrolled Agents.
Sen. Portman said the bill, which has been referred to the senate’s finance committee, won’t cost anything to implement.
He described the federal tax code as “antiquated” and the complex paperwork often requires individuals and businesses to seek professional assistance.
In 2011, the IRS began regulating paid tax preparers who weren’t attorneys, certified public accountants, or enrolled agents, requiring them to pass a qualifying exam, pay an annual fee, and complete 15 hours of continuing education courses each year.
But earlier this year, U.S. District Court Judge James Boasberg ruled the IRS misinterpreted an 1884 statute as enabling the new regulations. While the law allows the IRS to regulate those who present cases before the Treasury Department, that doesn’t include the actual filing of a tax return, the judge reasoned, saying the regulations require statutory authority.
“Filing a tax return would never, in normal usage, be described as ‘presenting a case,’” the judge wrote. “At the time of filing, the taxpayer has no dispute with the IRS; there is no case to present.”
The IRS had estimated the new rules affected 600,000 to 700,000 new preparers who were previously unregulated at the federal level, according to court documents.
CPAs, attorneys, and enrolled agents were already licensed to practice before the IRS and weren’t affected by the ruling.