Mr. Michael E. Hara

Internal Revenue Service

Room 5529W

1111 Constitution Avenue, N.W.

Washington, DC 20224

Re:     Section 6694 Guidance

Dear Mr. Hara:

The American Institute of Certified Public Accountants (AICPA) is pleased to present the enclosed comments regarding immediate guidance needed as a result of the recent revisions to the preparer penalty rules in section 6694 of the Internal Revenue Code. We welcome the opportunity to provide input to assist in the development of workable rules that will reflect the new standards and further equitable and fair tax administration.

Our comments address only those issues on which immediate guidance is needed to facilitate the transition to the new standards. Nevertheless, we believe that the new legislation has broader repercussions for the entire return preparation regulatory regime.

We recommend that the Service and Treasury provide guidance under section 6694 in two phases. The first phase would consist of the guidance to be issued shortly, addressing the most pressing issues needed to conform existing rules governing return preparers to the new law. The second phase would consist of an in-depth review of the rules regulating return preparers and the related penalties, culminating in proposed regulations that would address the broader issues in the area.

The AICPA appreciates the opportunity to provide you with these comments. The AICPA is the national, professional association of CPAs, with approximately 330,000 members, including CPAs in business and industry, public practice, government, and education; student affiliates; and international associates. Our members advise clients on federal, state, and international tax matters and prepare income and other tax returns for millions of taxpayers. They provide services to individuals, not-for-profit organizations, small and medium-sized businesses, as well as America’s largest businesses. It is from this broad perspective that we offer our thoughts today.

We would be pleased to discuss these comments with you or others at any time. If you have any questions about this matter, please contact me, at Jeffrey.hoops@ey.com; Alan R. Einhorn, at aeinhorn@deloitte.com; Edward S. Karl, AICPA Director, at ekarl@aicpa.org; or Jean E. Trompeter, AICPA Technical Manager, at jtrompeter@aicpa.org.

Sincerely,

Jeffrey R. Hoops

Chair, AICPA Tax Executive Committee

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