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EA Employed by Suspended CPA

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#1
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I am an EA employed by a CPA. The CPA is licensed in NC and MA. He had a problem with getting CPE (18.5 hours out of 40 including no ethics hours) accepted by NC. He told me yesterday that, instead of fighting it, he is probably going to accept the one year suspension proposed by the board. An internet search reveals that he signed a Consent Order on October 10th and it was accepted by the board on the 20th. So he either has returned his certificate very recently or must do so imminently. He is listed as Active in NC and MA. He told me yesterday that he would understand if I felt the need to leave. It would be nice to be able to afford my principles, but I have to be realistic that a permanent job may not come along immediately and me opening a full-time practice is not viable for my wife and me right now. With that in mind, I must do what I can, at my current employment, to protect my own credential.

Circular 230 10.51(10) says that suspension by any state etc CPA board is disreputable conduct. 10.51(11) says "Knowingly aiding and abetting another person to practice before the Internal Revenue Service during a period of suspension, disbarment or ineligibility of such other person" is also disreputable. I am on Powers of Attorney for numerous clients, some of which I have signed since the Consent Order. At what point must I cease representing his clients before the IRS? I have in the back of my mind a thought that he is supposed to notify the IRS if his CPA license is suspended, but I cannot find that in Circular 230. My employer seems to think that his MA license is enough to allow him to practice before the IRS.

I want to do the right thing by clients, if that is practical. However, no client is worth my EA credential and I wonder if telling my employer that I can no longer represent his clients before the IRS (effective first thing Monday morning) would be an appropriate course of action. All thoughtful observations and suggestions would be gratefully received.
 

#2
Coddington  
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So he was suspended for one year by a single state (of the two states in which he was licensed) and not by OPR? Unless and until OPR does something, (which might be limited to a letter of censure), I would not leave. I would definitely start putting out feelers for new jobs. After all, those are two separate provisions in Circular 230.
-Brian
Tax accounting methods and credits consultant for hire.

http://www.coddingtontax.com
 

#3
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Coddington, thanks for the response. As far as I can tell from the Consent Order available online, he was suspended on October 20th and has fifteen days from notification to return his certificate. I have looked at a lot of the board minutes this weekend. It seems to be a fairly standard punishment, even if one is literally a credit or two short.

You are right that he may only be censured (if that). Thanks for screwing my head back on for me.
 

#4
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Suspension for missing credits is hardly the same as suspension for tax fraud, etc. Inherently, that part doesn't worry me. You can continue to represent the clients because you are an EA.

That said, he wasn't even close to his required credits. If he had 38 out of 40, it was just an honest mistake. I would be asking myself "how does a professional not even come close to meeting his continuing education requirements?" and in absence of a damn good answer, like Coddington, I'd be looking at the job market.
 

#5
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The missing credits were his ethics requirement and 18.5 hours for a business development course. NC has not accepted business development and the MA website gives me no useful information one way or the other. As I understand it, he would have met the requirements if they had accepted business development and if he had taken an ethics course. As we are primarily a tax shop, I wonder if the ethics portion of a tax update course would have counted?
 

#6
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The ethics of a tax update course should count. But then again, I'm from Wisconsin, where we don't currently have CPE requirements, and the state bill to impose CPE requirements is quite expansive on what counts as CPE.

Your boss' failure isn't as bad as it originally sounded. But, then again, when there's only one thing that you have to do to keep your license active, you'd think that you'd dot your i's and cross your t's...
 

#7
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What are you aiding and abetting??? I see that there is room for concern but he is not the first guy to miss the CPE deadline.

I respect that you are cautious but if you represent one of his clients before the IRS how is that aiding and abetting?

I think you are fine if you believe this was an honest over sight on his part.
 

#8
makbo  
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southparkcpa wrote:I respect that you are cautious but if you represent one of his clients before the IRS how is that aiding and abetting?


I wondered about that as well. If someone is disbarred or suspended from practice before the IRS, how can you possibly assist them in practice before the IRS? They could assist you, of course, if for example you filed a POA under your name, but merely rubber stamped everything going both ways, and let the disbarred/suspended person actually do all the thinking and writing -- basically, they'd be hiding behind your credential.

Having gone through the relevant sections of Circ 230 a few times now, I want to check that I understand: disreputable conduct alone, such as losing active CPA status, does not automatically trigger suspension/disbarment before the IRS? OPR has to actually sanction you, based on receiving the information? And since he is still an active CPA in another state, doesn't that count for something? On the other hand, if you are an inactive CPA (and also not an attorney or EA), you aren't eligible to practice anyway, suspension or not.

I've never worked with/for a CPA, so mostly just curiosity on my part.
 

#9
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Southpark, you are right. I am being cautious, perhaps overly so. However, I started at this firm a little over a year ago and have found myself posting numerous times where he had me doubting my tax knowledge. For instance, I have a running battle with him over the deductibility of meals and entertainment. We are not talking about grey areas here. This is common-or-garden M&E.

Makbo, your first paragraph is pretty much what went through my mind before I started this thread. A plain reading of Circular 230 would suggest that suspension by one state board would be ample grounds for OPR to get involved. However, I have come to accept that this is not all that bad. In looking at other board decisions, I saw that one person who took the wrong ethics course suffered the same fate as my employer. That tells me that we have, at least, bad law in NC. If the board is required to suspend certificates for even a slight deviation from the rules, suspension is meaningless to the general public. However, this episode did prompt me to seriously think about the last year and a bit and I have decided that, taking everything into account (much of which I have not shared on this board), it is time for me to start looking. thanks to all for the thoughtful comments.
 

#10
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SumwunLost wrote:Southpark, you are right. I am being cautious, perhaps overly so. However, I started at this firm a little over a year ago and have found myself posting numerous times where he had me doubting my tax knowledge. For instance, I have a running battle with him over the deductibility of meals and entertainment. We are not talking about grey areas here. This is common-or-garden M&E.

Makbo, your first paragraph is pretty much what went through my mind before I started this thread. A plain reading of Circular 230 would suggest that suspension by one state board would be ample grounds for OPR to get involved. However, I have come to accept that this is not all that bad. In looking at other board decisions, I saw that one person who took the wrong ethics course suffered the same fate as my employer. That tells me that we have, at least, bad law in NC. If the board is required to suspend certificates for even a slight deviation from the rules, suspension is meaningless to the general public. However, this episode did prompt me to seriously think about the last year and a bit and I have decided that, taking everything into account (much of which I have not shared on this board), it is time for me to start looking. thanks to all for the thoughtful comments.



Well... it sounds more like he has an authority problem which long term may get him in hot water. Not knowing your situation exactly, but here in Charlotte the opportunity for good people like you (EA etc ) is tremendous. I would simply ask myself if this is where I want to be in 5 years.
 

#11
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Southpark, my situation is that I do not have a bachelor's degree (which I plan to remedy in the next year or so). That gets me eliminated from many jobs on indeed.com, because you have to check a box to say that you have a certain credential before they send the resume. It will still get sent, of course, but anyone who chooses to screen by mandatory questions will not see what they are missing out on. EA, over twenty-five years experience on two continents, lifelong learner - that should be attractive to a lot of firms, but it's not quite enough.

In five years, I want to be doing high-quality technical work. I want to help business owners to, legitimately, keep more of what they earn. That has been my passion for the last quarter century. I don't want to be constantly calling the IRS to beg for penalty relief because clients can't get organized and we miss the opportunity to boot their backsides because we are putting out other fires.
 

#12
philly  
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Sumwunlost good people such as you are in big demand in the NYC area.
 

#13
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Reviving this old thread. It came to my attention today that my employer's MA CPA license expired at the end of last month and he is not yet eligible to reapply for his NC license. I am as sure as I can be that he is not an attorney or an Enrolled Agent. Which means that he is almost certainly no longer a Circular 230 professional. We have dozens of Forms 2848 with both of us on them, some of which have been signed since the start of the month. The firm has carried on written correspondence with the IRS since the start of the month as well.

So I have good reason to believe that I am now the only Circular 230 professional in the firm. What am I letting myself in for? My employer signs all correspondence that goes to the IRS and signs all tax returns. However, the second paragraph of my OP articulates my fears and thoughtful observations on that point would be greatly appreciated.

I suppose it is possible that he forgot to renew and is in the process of sending a renewal now. How forgiving is MA of that?

Although my employer told me about the NC suspension, he did not tell me about the MA lapsing, which rather disappoints me. Does MA send reminders to renew?

EDIT: I should mention that I have reason to believe that he has represented taxpayers this month.
 

#14
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Here's an update. Thoughtful comments would be appreciated. I gather his MA license expired for failure to get enough CPE. It is still expired per the MA website. In other words, four months have gone by and he has spoken to the IRS on behalf of clients. I have no idea if the representation is of the sort an unenrolled preparer can undertake.

What is my exposure here? I have to say I am a little nervous. I worked hard for my EA credential and I do not care to lose it for failures by someone else.
 

#15
ATSMAN  
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I have no idea if the representation is of the sort an unenrolled preparer can undertake.


As an unenrolled preparer he can't. IMHO if you follow Cir 230 and not misrepresent your boss's situation to clients you should be ok. Your boss should let you handle all future contact with IRS on behalf of firms clients.
 


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