Asking the judge the 63-dollar question. CPA practitioners sue to stop PTIN fees (Journal of Accountancy):
Two CPAs have filed suit in the U.S. district court for the District of Columbia, asking the court to stop the IRS from charging fees for issuing preparer tax identification numbers (PTINs), to obtain refunds of fees paid in the past, and to enjoin the IRS from asking for more information than needed to issue preparer tax identification numbers (PTINs)…
Although the IRS claims that the excess fees are intended to be used to pay the costs of the registration cards sent to each preparer, the costs of forms and other guidance provided to preparers, and the costs of tax compliance and suitability checks, the plaintiffs point out that none of this has been done or should be done. No registration cards have been sent, the IRS does not normally charge to issue other tax forms and instructions, and it has not conducted suitability checks because attorneys and CPAs are not subject to those requirements. In fact, CPAs are subject to their own requirements to prove that they are fit and competent.
While I think the plaintiffs are correct in saying the $63 fee far exceeds any benefit we get from it, I suspect the attorneys will be the real winners in this suit.
TaxProf, The IRS Scandal, Day 488
Francine McKenna, Arthur Ashes:
Arthur Andersen is back from the dead. A group of former partners from the accounting firm is reviving the brand a dozen years after its demise. It’s a display of hubris that attempts to give credence to some revisionist history about Andersen.
Enron was no isolated event. Andersen was implicated in cases involving Sunbeam, WorldCom and others. Its settlement with the U.S. Securities and Exchange Commission over Waste Management was at the time, in early 2001, a rare fraud case against a big accounting firm.
With only four “major” accounting firms left, it’s hard to imagine any of them going the way of Andersen. It’s also hard to imagine that the Andersen brand will be worth more than, say, the Enron brand.
Kyle Pomerleau, IRS Releases More Detail on EITC Over-Payments:
One of the major issues with the Earned Income Tax Credit is that is suffers from a high amount of payment error. In any given year, the error can amount to approximately 25% of total payments and cost $14 billion dollars.
It is usually not clear exactly why these errors occur. There are two common stories behind them. The first story is about plain fraud. Taxpayers, or the preparers that help them file taxes, are purposefully misrepresenting their information in order to receive the EITC, or increase their EITC.
The second story is that EITC filers, which are typically lower-income individuals with lower levels of education, are making a high number of mistakes when filing. For instance, they may claim their child as a dependent (which leads to a much larger EITC), but their ex-spouse may have claimed their child as well. The result being that one parent is non-compliant.
Given that the errors result in overpayments of the credit, you have to think fraud is a big part of it. If the errors were random, you would expect about the same amount of underpayment errors as overpayment errors. Human nature itself plays a role, too; a disappointed taxpayer might keep working the numbers until a happy answer — an overpayment — is reached. A taxpayer who reaches a happy answer right away is less likely to re-run the numbers.
Jason Dinesen ponders What Responsibilities Do Tax Preparers Have in Assessing ACA Penalties? “Just because we think a law is stupid doesn’t mean we don’t deal with it.” If we didn’t, we would have very little to do.
Peter Reilly, Joan Rivers Made Tax History
Robert D. Flach brings your early-in-the-week Buzz! Today he returns to the hive withmore news of the anti-PTIN fee lawsuit, among other topics.
Martin Sullivan, How Much Do Converted and Nontraditional REITs Cost the U.S. Treasury? (Tax Analysts Blog)
Howard Gleckman, Treasury’s Lew Says Anti-Inversion Decision Will Come Soon, But Offers No Hints About What Or When. While we don’t know what the decision will be, we can be confident that it will leave the real problems — high rates and worldwide taxation of U.S. taxpayers — untouched.
Accounting Today has issued its annual list of the 100 Most Influential People in Tax and Accounting. Somehow I missed the cut again, though I follow a few on Twitter. I hope I can make the “100 most influential accountants in Polk County” list, but I may have to do some lobbying.
Congratulations to TaxProf Paul Caron and Going Concern’s Caleb Newquist, but the omission of Caleb’s crony Adrienne Gonzalez is a crime that cries out for justice.