The Honorable Douglas Shulman
August 17, 2011
Page 7 of 7
August 17, 2011
The Honorable Douglas Shulman
Commissioner
Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2011-61)
Room 5205
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
RE: Notice 2011-61, Continuing Education Providers
Dear Commissioner Shulman:
The American Institute of Certified Public Accountants is pleased to provide comments on Notice 2011-61, Continuing Education Providers. In general, the IRS is seeking public comments on the process for individuals and entities to be approved by the Service as continuing education providers. The first part of our letter reflects our thoughts on the continuing education provisions of TD 9527, final regulations governing practice before the IRS, as released in May 2011; the second part incorporates our comments on the technical issues raised by Notice 2011-61.
The AICPA is the national professional association of certified public accountants comprised of approximately 370,000 members. Our members advise clients on federal, state and international tax matters and prepare income and other tax returns for millions of Americans. Our members provide services to individuals, not-for-profit organizations, small and medium-sized businesses, as well as America’s largest businesses. As a leading provider of continuing professional education (CPE) for CPAs, the AICPA is well situated to provide input to the IRS on the technical issues related to developing and administering continuing education programs.
TD 9527, Final Regulations Governing Practice Before the IRS
We appreciate that the IRS seeks to ensure the provision of quality continuing education programs as reflected by Circular 230, sections 10.6(e)-(h) and 10.9, as contained in TD 9527. We commend the IRS for drafting section 10.9 of the final regulations such that the section adopts rules similar to the previous Circular 230 rules applicable to qualified sponsors.[1] Under section 10.9(a)(1) of the final regulations, a continuing education provider must (in general) be: (i) an accredited education institution; (ii), recognized for continuing education purposes by the licensing body of any state, territory, or possession of the United States, including a Commonwealth, or the District of Columbia; (iii) recognized or approved by a qualifying organization as a provider of continue education on appropriate subject matters; or (iv) recognized as an organization whose programs include offerings of continuing education opportunities on appropriate subject matter.
While CPAs generally are not directly impacted by the continuing education requirements of Circular 230 because we have our own continuing professional education requirements under state boards of accountancy, we applaud the Service for ensuring that AICPA and state CPA society provided continuing education courses qualify under Circular 230. This is particularly important from the perspective of our non-CPA staff who may choose to become registered tax return preparers and the many non-CPAs who recognize the quality of AICPA and state CPA society courses, and who need and want such courses to qualify for Circular 230 purposes. AICPA and state CPA societies provided continuing professional education courses already meet the requirements of Circular 230, section 10.9(a)(1) because their courses are generally recognized by state licensing bodies, or are approved by a “qualifying organization” as a provider of continuing education courses.[2] Moreover, the National Association of State Boards of Accountancy (NASBA) does an excellent job of fulfilling the role as a “qualifying organization.” In that role, NASBA currently recognizes the AICPA and state CPA societies as providers of appropriate continuing education courses.
We commend the IRS for not incorporating in the final Circular 230 regulations an earlier proposal that would have required continuing education providers to obtain the pre-approval of the IRS before offering continuing education courses to the public. We believe that by not mandating a course-by-course pre-approval process, the IRS will ensure that continuing education courses are timely and that the ultimate system for monitoring course quality will allow the IRS to effectively manage its limited resources.
The AICPA has long championed continuing professional education within the accounting profession; and in conjunction with NASBA, we issued the Statements on Continuing Professional Education Programs.[3] AICPA-provided CPE is accepted for licensing purposes by all state boards of accountancy. Moreover, NASBA provides a program whereby CPE providers, after demonstrating compliance with recognized national standards, are listed in the National Registry of CPE Sponsors. There is also a system for auditing these CPE providers to ensure continued compliance with these standards.
State boards of accountancy generally accept CPE programs sponsored by members of NASBA’s CPE registry. As part of the process of joining the national registry, CPE sponsors submit sample program materials and a full list of planned courses for NASBA review. These standards are comparable to the standards enumerated in Circular 230, section 10.9(a)(3). Membership in the National Registry of CPE sponsors is renewed annually, so these CPE providers are subject to regular review. Thousands of continuing education programs are presented on an annual basis through the National Registry of CPE Sponsors. Many of these sponsors are accounting and law firms that offer in-house training to their employees.
The IRS has historically relied on NASBA and NASBA accredited continuing education providers to provide high quality education to meet the requirements of Circular 230. While the new registered tax return preparer designation has its own unique course requirements under section 10.6(f) of Circular 230, this should not undermine the recognized effectiveness of NASBA as a qualifying organization of continuing education providers for purposes of section 10.9 of Circular 230. Therefore, AICPA, state CPA societies, and other NASBA registered CPE sponsors (that are currently NASBA accredited continuing education providers for purposes of Circular 230) should remain NASBA accredited continuing education providers for purposes of the new course requirements under section 10.6(f) for registered tax return preparers. Further, the mechanisms that are already in place to qualify courses for ethics credits under prior section 10.6 of Circular 230 should be adapted to identify courses that meet the Federal tax law, Federal tax law updates, and ethics course requirements for registered tax return preparers.
Notice 2011-61
We are providing comments on Notice 2011-61 to help the IRS develop a positive continuing education program for enrolled agents, enrolled retirement plan agents, and registered tax return preparers. The AICPA’s comments on the questions raised by the notice are found below.
Continuing Education Providers
1. The Information That an Applicant Must Submit to be Approved as a Continuing Education Provider
If a continuing education provider is not accredited by an accrediting organization, the standards for applying directly to the IRS should be developed by relying on existing standards already used in the continuing education industry. Among other things, information collected should establish the applicant's integrity, experience in providing continuing education in general, as well as continuing education related to taxation, other entities that recognize continuing education offered by the provider, the mechanism for awarding credit and record keeping ability, the number of students served, complaints received, membership in relevant organizations, faculty, a description of how courses are offered and updated, and an explanation of the provider's quality control and security mechanisms. The IRS should also collect information necessary to perform a tax compliance check and criminal background check of the organization and its chief officers.
The IRS should also consider making the names of providers public upon application and giving the public an opportunity to provide comments about the provider. The IRS should also consider a hotline for whistleblowers and others to report issues and problems with specific education providers.
2. The Criteria That the IRS Should Use to Evaluate Whether a Continuing Education Provider Applicant Meets the Requirements of Circular 230
If a continuing education provider is not accredited by an accrediting organization, the IRS should review the information in the application and determine whether the provider has a history of credibility, has the ability to provide accurate educational materials, meets nationally recognized standards for providing continuing education, meets its tax obligations and complies with the law, has the ability to provide education meeting the requirements of Circular 230 (including the ability to provide Federal tax specific education) and will provide the IRS with accurate information regarding who has successfully completed a course. Providers should also sign an agreement with the IRS agreeing to: (1) meet the standards for being an IRS-authorized continuing education provider; and (2) maintain appropriate course material and records for subsequent inspection.
3. The Criteria That the IRS Should Use to Evaluate Whether a Continuing Education Provider’s Programs Meet the Standards For Continuing Education Programs in Circular 230
If the continuing education provider is not accredited by an accrediting organization, the IRS should request a sample of existing Federal tax courses to evaluate the quality of the course offerings to determine if the courses meet the requirements of Circular 230. If a provider has not previously offered Federal tax courses, the IRS should require that the initial courses be pre-approved. After the IRS has been satisfied that the courses meet the standards of Circular 230, the provider's courses would not have to be pre-approved. Then, the IRS should establish a system for auditing providers to ensure the courses meet the standards of Circular 230 on an ongoing basis.
4. The Information That a Continuing Education Provider Must Provide to Renew Its Status as a Continuing Education Provider
If the continuing education provider is not accredited by an accrediting organization, one approach would be to require submission of a sample of Federal tax programs offered representing Federal tax update, Federal tax, and ethics courses within a window during the renewal period, and certification that the standards the provider has followed meet the standards set forth by the IRS for being an approved continuing education provider. If IRS resources permit, an audit should be performed during each accreditation period and an evaluation of the results of the audit and an agreed upon remediation plan should be required before renewal.
5. The Frequency and Month/Time of Year That Continuing Education Providers Must Renew Their Status With the IRS
The IRS should consider the standards of the industry when deciding the frequency for renewal. The administrative burden of renewal should not be so high as to discourage qualified continuing education providers from participating in the IRS program. However, the IRS should maintain the ability to terminate status as an approved provider.
6. The Level of Detail that Continuing Education Providers Must Provide to the IRS Regarding Changes in Continuing Education Programs Offered and the Mechanism for Notifying the IRS About These Changes
The IRS should carefully consider the level of oversight it wishes to have with respect to each particular program offered by an approved provider. Rather, the IRS may be able to better manage its limited resources and protect the integrity of the continuing education system under Circular 230 by using the strategy outlined above which relies on sampling, auditing, and agreeing/certifying compliance with the IRS's requirements.
7. The Information That the IRS Should Publish So That Tax Return Preparers May Identify the Individuals and Entities Approved as Continuing Education Providers
A lookup database similar to what is being contemplated for registered tax return preparers, accessible through the IRS website, should be used. As soon as a provider is approved, or a provider is no longer approved, the database should be updated.
8. The Approximate Date by Which Continuing Education Providers Should Receive Approval From the IRS to be Able to Offer Continuing Education Programs by January 1, 2012
Continuing education providers should receive approval from the IRS as soon as reasonably possible to enable the providers the ability to offer their courses in a timely fashion to the public.
Accrediting Organizations
1. Criteria IRS Should Use to Determine Which Accrediting Organizations Have Minimum Education Standards Comparable to Circular 230 In Order to Accredit Continuing Education Providers
Circular 230 section 10.9(a)(1)(iii) states that a “qualifying organization” may recognize and approve continuing education providers to offer appropriate continuing education courses. Notice 2011-61 appears to provide the term “accrediting organization” with the same meaning as Circular 230’s term “qualifying organization.”
As stated above, the AICPA in conjunction with NASBA has issued the Statements on Standards for Continuing Education (CPE) Programs. These standards are an excellent source for formulating criteria for “accrediting organizations,” for purposes of ensuring such organizations exceed “minimum educational” standards comparable to Circular 230 when accrediting continuing education providers. In developing appropriate criteria, we believe accrediting organizations should ensure that:
· Continuing education providers meet applicable CPE requirements of state licensing bodies, other governmental entities, professional organizations, etc.
· The continuing education provider’s continuing education courses are properly geared to the learning objectives and outcomes that clearly articulate the knowledge, skills, and abilities of the persons taking the continuing education course.
· Continuing education providers must be qualified in the subject matter of the courses offered.
· Continuing education providers should ensure that the learning activities or courses are reviewed by qualifying persons other than the persons who developed the course.
2. Procedures that Organizations Should Utilize to Be Designated as Accrediting Organizations
We recommend that accrediting organizations recognized by a licensing body of any state, territory, or possession of the United States, Commonwealth, or the District of Columbia be automatically designated as an accrediting organization for purposes of Circular 230.
3. The Reports, if Any, Accrediting Organizations Must Provide the IRS.
To the extent possible, the IRS should try to be consistent with others (e.g., the state boards of accountancy) who rely on these accrediting organizations. Of specific interest to our members would be rules that ensure that if the accreditation of a continuing education provider is withdrawn by an accrediting organization, such information should be reported to the IRS by the accrediting organization within a reasonable period of time. Such a report should include the continuing education provider’s name, the provider’s issued identification number, and the reason or reasons for withdrawal of its status as an approved continuing education provider.