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State Board Report

September 2014

Potential peer review changes and the AICPA’s Accounting and Review Services Committee’s (ARSC) proposed preparation standards were among the topics discussed by a panel including NASBA Chair Carlos Johnson and President Ken Bishop at the National Society of Accountants’ Annual Meeting on August 21, in Baltimore, MD.

IRS Commissioner John Koskinen, the NSA Annual Meeting’s keynote speaker, urged meeting attendees to contact their Congressmen to restore funding to the IRS. He said that his message to Congress is: “You cannot continue to reduce our resources and ask us to do more things. The blind belief in Congress that they can continue to cut funding and we will just become more efficient is not the case. We are becoming more efficient but there is a limit. Eventually the effects will show up. We are no longer going to pretend that cutting funding makes no difference.” Funding for the IRS was cut 7 percent for this year while 7,000,000 more taxpayers filed returns, he reported.

The IRS’s voluntary education and testing program for paid tax return preparers, which the agency plans to implement by the beginning of the 2015 tax filing season, was also discussed by Commissioner Koskinen. “It is important to keep the momentum going for the education of tax preparers, but it is only an interim step,” he said. Mr. Koskinen advised that the President’s 2015 Fiscal Year Budget includes language that would give the IRS mandatory oversight of return preparers, that would transition the “voluntary” program into a mandatory program.

A lawsuit to block the IRS from going ahead with its voluntary program has been filed by the AICPA. Institute President Barry Melancon said in announcing the suit: “The AICPA has been a steadfast supporter of the IRS’s overall goals of enhancing compliance by tax return preparers and elevating ethical conduct. However, the IRS’s new rule regulating tax return preparers is an unlawful exercise of government power. By implementing a purportedly ‘voluntary’ program that is mandatory in effect, the rule is an end-run around Loving v. IRS, a federal court ruling which struck down the IRS’s earlier attempt to regulate tax return preparers.”

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