Thoughts on IRS’ controversial letter campaign

December 19, 2011

By James D. Gottfried, CPA, Chair, The Ohio Society of CPAs

As 2012 PTIN renewals begin, Forbes.com contributor Kelly Phillips Erb (aka TaxGirl) wrote a scathing reproach of the IRS for its Notice 4809 letters, previously known as the “10,000 letter initiative.”

A few thoughts jumped out when I read the Forbes.com article. First, those with concerns and frustrations regarding the so called “10,000 letter initiative,” PTIN, and other IRS tax preparer changes are joining OSCPA by becoming more vocal. Frustration with quiet acquiescence is no longer the norm.

Second, although I did not personally receive the letter from the IRS, from what I have seen I understand the confusion (and for some the anger) as to how to interpret the letter. Not only has the distribution appeared to increase over the previous years, but the scope of the Notice also has broadened.

If the intent was to say to certain tax preparers there may be a visit starting in November, then it should have just addressed this. It also should have made clear that the intent is only to visit 2,100 out of the 21,000 notified. If the intent was to alert certain tax preparers to correct errors or misinterpretations of law, then it should have been specific about those issues.

I agree with the CPA from California that we don’t need to be reminded of our general obligations as tax preparers. Whether CPAs are associated with tax returns containing “entries far beyond average ranges” or not, we understand our obligations and take these obligations very seriously.

Third, and probably the most troubling, it appears the IRS does not distinguish among the types of tax preparers targeted in the campaign. Whether it is the Notice 4809 initiative or the fraudulent earned income credits issue, the IRS wants to lump CPAs and non-CPAs together as a group. I may be biased, but my assumption is there are distinctions between issues resulting from CPA preparers versus non-CPA preparers. The issues the IRS has discussed so far are much more prevalent with non-CPA preparers. To some extent the IRS even acknowledged this in previous discussions regarding earned income fraud issues. Yet CPA preparers continue to be subject to all of the tax preparer changes aimed at non-CPAs, as if we are just as much of the problem. If the IRS has information that indicates my assumption is wrong, they should disclose it.

As a profession, we are very good at addressing issues and resolving problems. Provide more detail as to the issues and, as a profession, we can help solve them. However, if my assumption is correct, then the IRS needs to change its approach and distinguish between CPA tax preparers and non-CPA tax preparers.

Fourth, the note on the IRS website acknowledging the issues addressed in the blog article not only shows the IRS hears the comments, but it gives hope they will act to address the concerns. Being more vocal has its benefits. I had the opportunity to be one of OSCPA’s representatives when we met with IRS Commissioner Doug Shulman and staff last spring. When we discussed these matters, they did appear interested in the issues we identified and our concerns about the impact on CPA tax practitioners, including making a commitment to move the firm visits out of tax season and better communicate the results of the visit. But there is still more to be done. Obviously, the tone of Notice 4809 is not a step forward.

We need to continue to address these concerns and Society leadership will continue to do so. If you want to help, or if you have specific facts or examples that we should raise with the IRS and Ohio’s Congressional delegation, please let us know. Share your thoughts below, or send them to cpavoice@ohio-cpa.com.


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