Unlicensed Accountants

[Number Six]

The other day there was this article at Lew Rockwell:

http://lewrockwell.com/north/north1135.html

It had this assertion:

"But there is a problem. CPAs are inside the tax system. They give advice as agents of the system. They are licensed by the profession, which has been granted an occupational monopoly by agencies of government.

"I used to have an accountant who had been a CPA, but he resigned. He turned in his CPA license. Here was his logic. 'I take extreme positions on interpreting the tax code, to enable my clients to pay minimal taxes. At some point, I argue very strongly in tax court. I could have been threatened by the IRS to have my CPA license revoked. To remove this threat, I sent back my license.' This man no longer takes clients with less than $1,000,000 income per year. Note: he is also a semi-pro poker player in Las Vegas. His moniker at the table would tell all but a professional to stay out of the game. He likes risk."

Is there any advantage for an accountant to be unlicensed? Wasn't the original reason for licenses to hold various professions accountable for their professional activities?

[Number Six]

Also, he may have never been a CPA, but just likes to bullsh*t, because he is Mr. Supercool-on-the-edge-poker-pro (wannabe). Or it could really be the truth.

"We see a gray-bearded man engaged in a series of adventurous pursuits: jai alai, close-combat sparring, piloting a motorboat full of beauty-pageant winners. 'His reputation is expanding faster than the universe,' says the voice-over. 'He once had an awkward moment just to see how it feels. He lives vicariously through himself. He is the most interesting man in the world.' We next see the bearded man seated at a lounge banquette, surrounded by attractive women. 'I don't always drink beer,' he says, 'but when I do, I prefer Dos Equis. Stay thirsty, my friends."

[Pottapaug1938]

Dos Equis -- the Budweiser of Mexico.

[Number Six]

Dos Equis -- the Budweiser of Mexico.

I tried a couple of their bottles today to see if it's any good. Any you're right, but I don't mind paying $4 toward a great ad campaign!

[Kestrel]

"I used to have an accountant who had been a CPA, but he resigned. He turned in his CPA license. Here was his logic. 'I take extreme positions on interpreting the tax code, to enable my clients to pay minimal taxes. At some point, I argue very strongly in tax court. I could have been threatened by the IRS to have my CPA license revoked. To remove this threat, I sent back my license.' This man no longer takes clients with less than $1,000,000 income per year. Note: he is also a semi-pro poker player in Las Vegas. His moniker at the table would tell all but a professional to stay out of the game. He likes risk."

Is there any advantage for an accountant to be unlicensed? Wasn't the original reason for licenses to hold various professions accountable for their professional activities?

I don't have any statistics on this. But I'll suggest that the likelihood is very remote that a never-licensed or never-certified accountant could ever have the luxury of a developing a client base consisting solely of million-dollar-earning clients.

Furthermore, now the IRS is requiring paid tax return preparers to hold Preparer Tax Identification Numbers (PTINs) and makes them subject to penalties. I'll suggest that Mr. North's ex-CPA who takes extreme tax positions for his wealthy clients may be somewhat hamstrung.

[Note to the Captain: A CPA and an Enrolled Agent are different. See the link above on PTINs.]

Now there are different kinds of accountant certifications. Here is a fairly long list. You don't have to be a state-licensed CPA to rise to the top, but you still stand a better chance of rising to the top if you are affiliated with and certified by a professional group of some kind.

Accountants without a certification or license of any kind, who engage in public practice, wind up being limited by state restrictions on what kind of accounting services non-CPAs can perform for the public. Most of them end up running small offices doing bookkeeping and lightweight tax work for small businesses. It's an honorable profession, but it often pays a lot less than typical CPA work.

[notorial dissent]

"I used to have an accountant who had been a CPA, but he resigned. He turned in his CPA license. Here was his logic.
Sure he was, and sure he did!!!

'I take extreme positions on interpreting the tax code, to enable my clients to pay minimal taxes. At some point, I argue very strongly in tax court. I could have been threatened by the IRS to have my CPA license revoked. To remove this threat, I sent back my license.'
I think this statement pretty well says it all. I can't imagine that this is anything more than an excuse for not having a CPA license for whatever reason. The only reason he would have been "threatened" was because he was over the edge and violating usage rules.

This man no longer takes clients with less than $1,000,000 income per year. Note: he is also a semi-pro poker player in Las Vegas. His moniker at the table would tell all but a professional to stay out of the game. He likes risk."
Yeah, right, no one, with that kind of money, unless they just won it off of a raffle ticket, and then fell off the turnip truck, is going to trust an unlicensed, risk taker accountant. In fact those two terms are oxymoronic in the extreme now that I think about it. Besides, I would always wonder just whose money he was playing with.

[Kestrel]

This man no longer takes clients with less than $1,000,000 income per year. Note: he is also a semi-pro poker player in Las Vegas. His moniker at the table would tell all but a professional to stay out of the game. He likes risk."
Yeah, right, no one, with that kind of money, unless they just won it off of a raffle ticket, and then fell off the turnip truck, is going to trust an unlicensed, risk taker accountant. In fact those two terms are oxymoronic in the extreme now that I think about it. Besides, I would always wonder just whose money he was playing with.

Come to think of it, you're right. Good Mr. North merely implied that this ex-CPA had clients. He didn't really claim it was true. All he told his readers is what criteria the guy would use for selecting clients, if anyone was foolish enough to try to hire him.

I'm betting he has no clients whatsoever, and I think that's a surer bet than his poker bets.

[notorial dissent]

I just can't help thinking from reading that whole thing, that it is either 1) an apophrical story, or 2) the veriest of hooey, and considering the source, I am betting on both.

[wserra]

Here was his logic. 'I take extreme positions on interpreting the tax code, to enable my clients to pay minimal taxes. At some point, I argue very strongly in tax court. I could have been threatened by the IRS to have my CPA license revoked. To remove this threat, I sent back my license.'

If hypothetical accountant "takes extreme positions" and wins, more power to him - but then, by definition, those winning positions are not "extreme". Not only is there no reason for the IRS to threaten him but, if they actually did anything, he could sue them, win, and have a huge calling-card for his practice. If hypothetical accountant repeatedly "takes extreme positions" and loses, then yes, that could cost him his access - deservedly so, because he's screwing his clients. So - if there is any truth to this at all - he was taking stupid positions, losing, costing his clients, and resigned a step ahead of the scythe.

A prince among accountants.

[Famspear]

"But there is a problem. CPAs are inside the tax system. They give advice as agents of the system. [wrong] They are licensed by the profession, which has been granted an occupational monopoly by agencies of government.

"I used to have an accountant who had been a CPA, but he resigned. He turned in his CPA license. Here was his logic. 'I take extreme positions on interpreting the tax code, to enable my clients to pay minimal taxes. At some point, I argue very strongly in tax court. I could have been threatened by the IRS to have my CPA license revoked. To remove this threat, I sent back my license.' This man no longer takes clients with less than $1,000,000 income per year. Note: he is also a semi-pro poker player in Las Vegas. His moniker at the table would tell all but a professional to stay out of the game. He likes risk."

Anyone who turns in his CPA license because he thinks doing so allows him to "take extreme positions" in tax practice is an idiot.

There is no advantage for an accountant to be unlicensed.

The IRS will not generally "threaten to have your CPA license revoked." The IRS does not issue CPA licenses. Yes, if the IRS disbars you from practice before the IRS, the state licensing authority may well revoke your license.

If you are doing things that will get you disbarred or that will get your license revoked, you should be run out of the business anyway.

[jg]

'I take extreme positions on interpreting the tax code, to enable my clients to pay minimal taxes. At some point, I argue very strongly in tax court. I could have been threatened by the IRS to have my CPA license revoked. To remove this threat, I sent back my license.'

Of course, since 1942 a CPA must pass a rigorous exam in order to practice before the Tax Court. See http://www.starkman.com/taxcourt/taxcourt.html

So, either this CPA was in the about 300 people that have passed the exam since 1942 or the tax court arguments were prior to 1942.
(The 2007 article at http://www.taxcourtexam.com/THE_TAX_COURT_EXAM.pdf states that 241 had passed by then.)

[Kestrel]

'At some point, I argue very strongly in tax court. I could have been threatened by the IRS to have my CPA license revoked. To remove this threat, I sent back my license.'

So, either this CPA was in the about 300 people that have passed the exam since 1942 or the tax court arguments were prior to 1942.

Fewer than 300, eh? Well in that case it shouldn't be too difficult to figure out who the guy is, if there is a searchable database naming the CPAs who passed the tax court exam. All someone would have to do is check the CPA license status of non-attorney tax court practitioners, look for voided/revoked CPA licenses, and then check the appropriate state's business records on the former licensees looking for activity that would suggest million-dollar-earning clients.

Want to bet that such a search will come up empty?

Mr. North's assertion is sounding more and more like hornswoggle.

[notorial dissent]

So, either this CPA was in the about 300 people that have passed the exam since 1942 or the tax court arguments were prior to 1942.

Or, more likely none of the above.

Come on, this has hair all over it.