"Michael T Wing CPA" <mtwingcpa[at]yahoo.com> wrote:
- quote -

Sorry, you're right. But while explicit preemption is
useful, it's not always necessary.

In the recent case of AMERICAN INSURANCE ASSOCIATION v.
GARAMENDI, the US Supreme Court reviewed an agreement
between the US government and Germany with regard to life
insurance policies of holocaust victims. The court
specifically observes,

"But petitioners and the United States as amicus curiae both
have to acknowledge that the agreements include no
preemption clause, and so leave their claim of preemption to
rest on asserted interference with the foreign policy those
agreements embody."

Nevertheless the court held state law attempting to require
German insurance companies to pay claims on old life
insurance policies issued to holocaust victims.

In the recent case of BENEFICIAL NAT. BANK v. ANDERSON, the
Supreme Court dealt with usury and in specific the statutes
12 USC section 85 and 86. There is no specific preemption
clause in either one of those statutes. The court said,

"In a series of cases decided shortly after the Act was
passed, we endorsed that approach. In Farmers' and
Mechanics' Nat. Bank v. Dearing, 91 U.S. 29, 32-33 (1875),
we rejected the borrower's attempt to have an entire debt
forfeited, as authorized by New York law, stating that the
various provisions of §§ 85 and 86 "form a system of
regulations . . . [a]ll the parts [of which] are in harmony
with each other and cover the entire subject," so that "the
State law would have no bearing whatever upon the case." We
also observed that "[i]n any view that can be taken of [§
86], the power to supplement it by State legislation is
conferred neither expressly nor by implication." Id., at 35.
In Evans v. National Bank of Savannah, 251 U.S. 108, 114
(1919), we stated that "federal law . . . completely defines
what constitutes the taking of usury by a national bank,
referring to the state law only to determine the maximum
permitted rate." See also Barnet v. National Bank, 98 U.S.
555, 558 (1879) (the "statutes of Ohio and Indiana upon the
subject of usury . . . cannot affect the case" because the
Act "creates a new right" that is "exclusive"); Haseltine v.
Central Bank of Springfield, 183 U.S. 132, 134 (1901)
("[T]he definition of usury and the penalties affixed
thereto must be determined by the National Banking Act and
not by the law of the State")."

And in Nash v. Florida Industrial Comm'n, 389 U.S. 235
(1967), a unanimous Supreme Court held that a state policy
of withholding unemployment benefits solely because an
employee had filed an unfair labor practice charge with the
National Labor Relations Board had a direct tendency to
frustrate the purpose of Congress" and, if not preempted,
would "defeat or handicap a valid national objective by
withdrawing state benefits simply because an employee
engages in conduct protected and encouraged by the NLRA.
There was no argument in that case that there was an
explicit preemption of state law.

Stu

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spamtrap[at]lexregia.com says...

- quote -

Some would say that Roy Williams is on the other end of that
intercom.

Gary

--
You can probably X figure out X which letters to X delete to
derive my email address X.

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D. Stussy wrote:

- quote -

Not exactly. California still requires the performance bond
for EAs who prepare returns in California. I think they
waive the bond for California CPAs and lawyers authorized to
practice in California, but it's been a while since I've
prepared a return for money for other than an employer or a
trust of which I am trustee.

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Stuart O. Bronstein <spamtrap[at]lexregia.com> wrote:

- quote -

Here is a quote from ERISA 29 USC 1144. This looks pretty
specific to me. <g
---begin quote---

Sec. 1144. Other laws

-STATUTE-

a) Supersedure; effective date

Except as provided in subsection (b) of this section, the
provisions of this subchapter and subchapter III of this
chapter shall supersede any and all State laws insofar as
they may now or hereafter relate to any employee benefit
plan described in section 1003(a) of this title and not
exempt under section 1003(b) of this title. This section
shall take effect on January 1, 1975.

---end quote---

I have not seen anything even remotely similar with respect
to tax return preparers.

MTW

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Stuart O. Bronstein wrote:

- quote -

I don't know about no such provision being in ERISA. ERISA
Section 514(a) provides "Except as provided in subsection
(b) of this section , the provisions of this title and title
IV shall supersede any and all State laws insofar as they
may now or hereafter relate to any employee benefit plan
described in section 4(a) [29 USC §1003(a)] and not exempt
under section 4(b) [29 USC §1003(b)]. This section shall
take effect on January 1, 1975."

--
Ed Zollars, CPA
Phoenix, Arizona

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- quote -

I agree that ONE intent of the 10th was to restrict federal
power, but it also SEPARATES federal power from that of the
states or the people. Unless specifically permitted (by
statute), one cannot walk over the other.

Medical Marijuana is an example of that conflict - legal in
at least two states under state law but still illegal under
federal law.... Given time, challenges will come.

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- quote -

The California rules for "tax preparers" exclude the "big 3"
as far as a CTEC license is concerned - so I see that as the
state RECOGNIZING the federal license WITHOUT even
attempting to impose any additional restriction. Not so
with the Oregon statute as quoted earlier.

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"Michael T Wing CPA" <mtwingcpa[at]yahoo.com> wrote:
- quote -

I don't believe a specific preemption provision is required.
There is no specific preemption provision in, for example,
ERISA, but it has been held to preempt states from
regulating employment plans, even to give the employees more
protection.

Stu

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Bob Oaks <bobinsfoNOSPAM[at]yahoo.com> wrote:

- quote -

I agree with your analysis. I have yet to see SPECIFIC
preemptive legislation by Congress in this area.

MTW

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"Bob Oaks" <bobinsfoNOSPAM[at]yahoo.com> wrote:

- quote -

That's partially true. The states are not allowed to
regulate anything that Congress has, in the opinion of the
courts, completely occupied the field. For example there is
no law saying that states can't impose stricter guidelines
on ERISA plans. But the courts have taken the law to mean
that the federal laws are the only ones allowed to deal with
most aspects of such plans.

The reason it works for consumer regulation is that Congress
usually imposes what are seen as minimum standards. So
stricter standards are not contrary to Congressional intent.
With respect to preparation of federal tax returns, the IRS
has, pursuant to statute, promulgated rules that specify
when someone is qualified to prepare returns. Any state
regulation would be in derogation of the federal scheme.

- quote -

Perhaps someone would have challenged it if the issue ever
came up. But I seriously doubt that any state would have
attempted to prosecute someone solely for preparing federal
returns, if they were a qualified EA.

Stu

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"Stuart O. Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

Yes, that is true, but and by doing so they set a minimum
standard. Unless Congress also said that states could not
apply additional standards, it is legal for them to do so.
States cannot ignore the minumum standard, but they can add
additional standards, and they obviously have without
serious complaint for many years.

- quote -

OK, if you don't like those examples, use voting
requirements for President and Congress (Federal offices).
As originally written, the Constitution left eligibility
requirements and process almost exclusively to the states.
Over time there were several Constitutional amendments and
federal laws restricting the states' ability to set those
requirements (sex, race, direct election of Senators, age,
poll tax, etc.) but there are still some aspects of federal
voting requirements still determined by the states (length
of residence comes to mind--I think that is still a state
perogatives). The point is that the purpose of the 10th
Amendment was to restrict the Federal government, not the
state governments. Many of the electoral changes required
amendments precisely because of the 10th Amendment.

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- quote -

This is a fairly common practice and is not unconstitional.
California has higher automobile emission standards than the
federal standards, for example. Stricter gasoline mileage
requirements as well. Inspections on plants coming into the
state is another example (so does Hawaii). The only time
this becomes an issue is when the Federal Government
specifically denies states the right to pass further
restrictions. This happened recently when Congress passed a
national banking privacy law that was much weaker than a
recently passed California law. (consumers be damned). As
far as I know, Congress has never forbidden states to
regulate tax preparers within those state boundaries. Those
states have in effect said you need to be more than just an
Enrolled Agent to engage in tax preparation as a business.
The mere fact that at least two states do regulate tax
preparers is in itself an argument against your position.
Surely someone would have challenged this over the many
years these regulations have been in place if they were
unconstitutional.

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"Bob Oaks" <bobinsfoNOSPAM[at]yahoo.com> wrote:
- quote -

Congress gave the IRS the power to administer federal tax
laws. Licensing EA's could well be seen as coming within
that power.

- quote -

The other things you're talking about are strictly local.
When it comes to performing services with respect to federal
law, the federal government may regulate exclusively.

For example, an attorney who is qualified under federal
standards can practice federal law in a state, even though
he has not qualified for the bar of that state. At least
that's the way it is in California.

Stu

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Bob Oaks wrote:
- quote -

YES, IT HAS: 10th Amendment: "The powers not delegated to
the United States by the Constitution, nor prohibited by it
to the States, are reserved to the States respectively, or
to the people."

The United States, under the legislative power granted it in
Article I, has passed a set of laws (including 5 USC 330 and
31 USC 500 [citations from memory - check them]) that
indicate who may practice before its Treasury Department,
and 31 CFR 10 is the final regulatory expansion and
interpretation of those statutes.

Since the U.S. has a set of laws and regulations, it has
reserved (by delegation and/or exercise of a power that it
has under Article I, Section 8, last paragraph) that
authority to itself, which means that the states nor the
people may interfere. If Oregon is saying that they can
regulate the preparation of a federal tax return within its
borders, then it is interfering with the federal authority -
and that is what makes it unconstitutional.

- quote -

And an enrolled agent does have a license - a FEDERALLY issued one.

If any state had the right to impose an additional
requirement, that would in fact place state law at a higher
authority than federal - and that would violate Article III
of the Constitution, especially in the case of the power
vested the Supreme Court.

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Michael T Wing CPA wrote:
- quote -

Then why does the "due dilligence" section of 10.22(a)
(actually titled "dilligence as to accuracy") include
preparation in its list if that action is excluded from
"practice"?

Your citation indicates who may practice without enrollment
(other than 10.3). [Your citation would ALSO trump state law
with respect to federal tax return preparation (and
furnishing information) described therein.]

- quote -

My position is that [any] state has no authority whatsoever
to interfere in any way with federal tax matters, and that
any law that says otherwise is unconstitutional per the
federal 10th Amendment.

- quote -

That just means that the practice of "tax" isn't the
practice of law or of accounting. ["Tax" as described in 31
CFR 10.]

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Benjamin Yazersky CPA wrote:

- quote -

Oregon generally does not claim to regulate those that do
not have nexus in Oregon--so that NY CPA would not need to
be licensed by Oregon to prepare that person's return. Now,
they do seem to reserve the right to claim jurisdiction *if*
you actively advertise for clients in Oregon, but I suspect
that's primarily an abuse provision for enforcement (to go
after cases where someone attempts to actively evade
Oregon's jurisdiction but still run an Oregon practice).

--
Ed Zollars, CPA
Phoenix, Arizona

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"Benjamin Yazersky CPA" <BYaz55DoNotHitReply[at]netscape.net> wrote:
- quote -

The Oregon Board of Tax Practitioners only licenses those
who do business (actually prepare returns) in Oregon. You
are free to prepare Oregon returns or returns for Oregon
residents without restriction.

- quote -

You are correct on all of the above.

- quote -

The Oregon law requires a representative to be an attorney,
a CPA, an Oregon LTC, or an EA (as of 1/1/2004), and it does
use the term "Oregon licensed". However, I believe that, in
practice, the fact that you are licensed somewhere else
because you are somewhere else will not mean that they will
refuse to deal with you. My colleagues who practice across
the river (in Washington) from me deal with ODR regularly
and have never mentioned having any problems dealing with
them.

Bryan

-------- Bryan Kellar, EA
Pioneer Tax & Accounting Service Portland, Oregon
www.oregontaxhelp.com

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:

- quote -

I don't think so. Does the Constitution specifically give
to the United States Government the power to determine the
rules and regulations for selling services as a tax
preparer? Has Congress every established such standards?
If not, then this power is reserved to the states in the
10th Amendment. As far as I know, every business needs some
kind of license, usually from the state. To set up a
business for tax preparation in Oregon, you must meet the
requirements of that state, including the tax preparation
business. Why is that any different from regulations to fix
plumbing, for example? Even if there were federal standards
for tax preparation (don't think there are), Oregon could
probably make them stricter (though not looser), just as
California does in air quality or OSHA standards.

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- quote -

Just to clarify things, the Oregon Board of Tax
Practitioners only licenses persons who prepare tax returns
for a fee in Oregon.

If you are preparing taxes in Oregon, you must be licensed
(or an attorney or a CPA) to prepare any individual income
tax return. This means federal, state, whatever. (Aside to
another posting: I guess I don't know enough about why this
might be unconstitutional to comment on that aspect.)

There is no restriction or licensing required to prepare an
Oregon state return if you are preparing it out of state.
Just put "None" where it asks for a license number.

They are not licensing people who prepare Oregon returns,
only persons and businesses doing the business of preparing
tax returns in Oregon.

Bryan

--
Bryan Kellar, EA
Pioneer Tax & Accounting Service Portland, Oregon
www.oregontaxhelp.com

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D. Stussy <kd6lvw[at]bde-arc.ampr.org> wrote:

- quote -

Actually, 31 CFR 10.7 lists return preparation among
numerous other things that DON'T constitute "practice"
and/or are not subject to Circular 230.

In my opinion states CAN require licensing of those who
"hold out" as tax preparers within their borders. However,
in the case of federal tax return preparation, they could
probably exert very little control over the nature or
conduct of the service itself. Perhaps the "licensing" would
be limited to "registration," but I have no doubt that they
could legally require it.

It is also interesting to note 31 CFR 10.32 which states:
"Nothing in the regulations in this part shall be construed
as authorizing persons not members of the bar to practice
law." This, it appears to me, clearly reserves to the states
(or whoever controls the "bar") the right to "intervene" in
this area to a some degree.

MTW

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