NSA Urges U.S. Senate Finance Committee to
Enact Tax Preparer Legislation

Proposed legislation would require tax preparers to demonstrate expertise; national exams offered by credentialing organizations would demonstrate proficiency

Alexandria, VA, April 12, 2007 — Today the National Society of Accountants (NSA) delivered a statement to the U.S. Senate Finance Committee in support of legislation that would require professional tax preparers to demonstrate their expertise before they can submit returns on behalf of taxpayers.

NSA has long supported this type of legislation, provided it recognizes the validity of existing examinations offered by nationally recognized credentialing organizations such as the Accreditation Council for Accounting and Taxation (ACAT) or the American Institute of Certified Public Accountants (AICPA) as a means of meeting the standard required to practice.

Responding to recent allegations lodged against individuals operating as franchisees of the nationÕs second largest tax preparation firm, the NSA statement said, ÒThere is a large body of tax preparers who do not belong to any professional organization. The commitment of these individuals to ethics, professionalism, and continuing education is unknown but the recent allegations should spur members of this body to enact legislation to establish broader regulation of firms and individuals who prepare federal income tax returns.Ó

NSA President Robert H. Fukuhara, Jr., CPA, stated that Òthe complexity of the tax system is such that most Americans can benefit from tax professionals to save them time and often catch deductions or credits they might miss on their own.Ó Fukuhara added that Òthe public should have a right to expect that these professional tax return preparers have demonstrated expertise in this area of the law and we strongly support appropriate legislation.Ó Fukuhara noted that this issue was addressed in the last Congress in S. 832 and urged members of the Committee to consider introducing a similar bill this year.

Last year, S. 832 instructed the Treasury Department to develop and administer an eligibility examination designed to test the knowledge and technical competency of individuals who prepare federal tax returns. Rather than developing a new examination for existing credential holders, the bill adopted NSAÕs recommendation to give the Treasury Department and the IRS the authority to approve examinations offered by nationally recognized credentialing bodies such as ACAT.

For any legislation introduced this year, NSA gave the Senate Finance Committee the following elements that it believes should be included:

1. A separate administrative entity should be established to examine and register tax preparers.
2. A professional tax preparer must have taken and passed a national examination, whether offered by the Treasury Department or by a nationally recognized credentialing body such as the Accreditation Council for Accounting and Taxation.
3. A requirement for ongoing continuing professional education and registration renewal every three years to ensure that such educational standards are met.
4. A waiver of initial examination for individuals who are recognized under regulations issued by the Treasury Department as:

   a. Holding current credentials offered by nationally recognized credentialing bodies; or
   b. Holding a current license to practice accountancy from a Board of Accountancy in any state; or
   c. Holding a current license to practice law in any state; or
   d. Holding a tax return preparation license established under state law.

5. The clarification of the Enrolled Agent credential.
6. Using the title ÒRegistered Federal Tax Return PreparerÓ or similar term as a descriptor.

NSA said it Òrecognizes that this regulatory structure may take a two to three year time period to develop and implement. We have taken the liberty of preparing a model bill that uses S.832 as a base but adds the concepts outlined above.Ó NSA provided a copy of this model bill to the committee. To read the complete NSA statement and learn more about the NSA position on this issue, visit www.nsacct.org and click on ÒPress Room.Ó