COSEA Legislative Day: The Importance
As I look back on the history of Enrolled Agents and the purpose of the designation, there is always that one word that comforts each and every one of us, FEDERAL. Our license is a Federal designated license. Implying it can circumvent any state restriction. In addition, I can work with a client who lives in my neighborhood or that same client if he/she moves across the country 1200 miles away to another state.
As we have seen throughout this very current pandemic, however, state laws have a very real impact on day to day life. In one state, I can go to the barber, in another, I cannot even go to a restaurant right now and order. State laws have the potential to impact federal licenses. As I continue to discuss this topic with Enrolled Agents, many are surprised by this statement.
Even as federally licensed Enrolled Agents, we must always adhere to the state laws, in which we reside. The following illustrates several recent examples of how state laws directly impacting and attempting to impact Enrolled Agents.
In Colorado, 2012, a bill was introduced to Colorado legislation. It was called, the Colorado Uniform Debt-Management Services Act. This bill regulates companies that offer and provide debt management services to Colorado Residents. This bill (Title 12-Revised to Title 5 DMSA) passed.
The bill called for any company or individual working with the public and debt collections to register with the Colorado Secretary of State, pay a $1000 registration bond and $1000 annual bond, plus agree to an examination fee. A requirement to provide written evidence of insurance and inform the Secretary of any cancelations, reductions or terminations. Only certain attorneys and CPA’s were exempted.
The amendment of this bill to include Enrolled Agents required more money than COSEA board had in reserves. The board went to National and asked for financial assistance, which was granted. Also, it required the members of the board to find and hire a lobbyist to accompany them to the capitol during tax season multiple times, in order to provide first-hand information on the floor to our legislative leaders. The ramifications of attending to an adverse bill such as this are too numerous to list here, but a few should be noted. How easy will it be to acquire more financial assistance from national next time? What happens when a lobbyist is not as easily available as the one we acquired in 2012? After surviving an event such as this, it becomes our responsibility as informed members, directors of the state affiliate board, to prevent anything like this from happening in the future. That weight should be heavy on our shoulders.
The origins of this bill bring about another topic that bears mentioning. An Enrolled Agent performed sub-par work in Colorado for a family member of the Senate Finance Committee Chair. This was the catalyst for the DMSA bill. AND as is illustrated below, sub-par work was the catalyst for other pieces of legislation in other states. We, as an organization, must always remain vigilant and police our own, in order to remain vital and legitimate in the public eye. Forming an ethics committee and responding to any complaints timely. Then, offering advocacy and education to the Enrolled Agent involved to elevate the entire industry.
Another example of how state laws can affect the Enrolled Agent’s Federal license and their ability to perform the work we are paid to do every day. In Nevada, 2017, a bill was drafted that threatened the EA’s ability to advise clients, prepare tax returns and represent taxpayers. All the services we provide to our client’s daily. Nevada Society of Enrolled Agents kicked it into high gear and reached out to National asking for guidance, financial support and other affiliates that had gone through similar challenges. This was, again, a reactionary move to a threat. No pre-emptive thought had gone into education or relationships building on the state level. This cost Nevada Society of Enrolled Agents a lot in terms of money and time for years to come.
A current fight, Minnesota Statute 322B. This Statute, which has passed, is very similar to Colorado’s DMSA bill. It requires Enrolled Agents who represent taxpayers in the state of Minnesota to register with the state and pay $1000, a $250 annual fee and post a $5000 security bond. The current battle will be costly to Minnesota EA’s and National has agreed to assist. Again, the state has come in after the fact, a reactionary response that will cost them more in time and finances.
Also, the key component of Legislative Day, reminding our members and non-members of the importance of contacting their local leaders if only to connect and educate them about the Enrolled Agent designation so that the next time there is a bill on the floor and there will be a House or Senate leader that will be informed and can say, “yes, I know what an Enrolled Agent does and they hold a federal license issued by the Internal Revenue Service”. Each legislator should know that federal license requires three SEE exams to obtain and 30 hours of CE a year to maintain as well as compliance to the ethical guide 230 issued by Internal Revenue Service. Legislative Day is more than one day a year, it requires a dedicated Legislative committee that maintains a working relationship with a lobbyist. This lobbyist can represent us in many aspects. The AICPA, Colorado Bar Association Tax Division, and Public Accountants Society all have their own lobbyists and these Associations and Societies are our competition. We need a lobbyist to establish relationships with other lobbyists associated with these groups. To watch legislation that could negatively impact our designation, as well as inform us of any tax bill. A lobbyist can also provide opportunities to meet with legislative leaders.
Our challenge as stewards to the Colorado Enrolled Agent community is not only to represent EA’s and provide quality education to our members, but is much, much broader. We must protect the EA designation by educating our state House and Senate leaders. This requires dedication and Provide clear and comprehensive guidance to those Colorado EA’s that are behaving less ethically than desired. It is our duty as leaders, board members and Colorado Enrolled Agents to be proactive, ethical, and protective of our license in order for continued success.
Penny Fisher, EA, NTPI Fellow®