On March 21, 2014, the New Jersey Judiciary’s Committee on the Unauthorized Practice of Law issued Opinion 51 wherein the Committee found that it is in the public’s interest to permit enrolled agents licensed by the Internal Revenue Service (IRS) to prepare and file New Jersey transfer inheritance tax returns on behalf of clients.
In 1972 the Committee determined that because of the legal principles involved, the preparation and filing of New Jersey transfer inheritance tax returns is the practice of law and can only be performed by lawyers. In 1986, the New Jersey Supreme Court agreed, but held that a licensed CPA may do so if the client has been notified that review of the return by a lawyer would be advisable.
In reaching its recent opinion, the Committee reviewed the requirements necessary for an enrolled agent to obtain and maintain a license from the IRS. IRS enrolled agents are licensed by the Internal Revenue Service through background evaluation and examination. Such licensed agents are required to complete continuing education courses, and comply with the duties of IRS Circular 230 (Regulations Governing Practice before the Internal Revenue Service). The Committee found that, like CPAs, enrolled agents are capable of filing a New Jersey transfer inheritance tax return, and, as long as enrolled agents follow the same client notification requirements that New Jersey CPAs are required to follow under N.J.A.C. 18:26-12.2, the public interest is protected.
Under the provisions of N.J.A.C. 18:26-12.2(a)1.iv, before beginning work on a New Jersey transfer inheritance tax return, CPAs, and now enrolled agents, must notify the client in writing that “review of the return by a qualified attorney may be desirable because of the possible application of legal principles to the preparation of the tax return.” A copy of the properly executed notification must be filed with the transfer inheritance tax return.
The Division is in the process of revising the regulation to indicate that it applies to enrolled agents.
For more information, refer to the IRS web site pertaining to the Enrolled Agent Program.