(Bloomberg) The Internal Revenue Service said it will appeal a court’s ruling that it lacks the power to license tax preparers, a decision that might affect as many as 700,000 people who work on clients’ returns.
Immediately discontinuing the agency’s tax preparer oversight program “would result in a substantial disruption to tax administration,” the IRS said in a court filing yesterday accompanying a request to lift a court order barring it from regulating return preparers during its appeal.
U.S District Judge James Boasberg in Washington, D.C., ruling on a lawsuit filed by three preparers, invalidated the program Jan. 18. The agency overstepped its authority by relying on an 1884 law that allows it to regulate people presenting cases before the Treasury Department, he said.
The IRS program favored large corporate providers of tax services such as H&R Block Inc. and Intuit Inc. over smaller independent return preparers, said Dan Alban, an attorney with the Institute for Justice, a self-described libertarian public interest law firm representing the plaintiffs.
Large providers lobbied the IRS “for this program that they knew would put a lot of mom-and-pop preparers out of business,” Alban said in a phone interview from the group’s Arlington, Va.’s offices. “This is an example of protectionism at its finest.”
Program Proponents
Tax-preparation companies have expressed support for the program.
“We have been proponents of oversight, not to disadvantage competitors but in favor of consumers,” said Julie Miller, a spokeswoman for Intuit, the maker of TurboTax.
The IRS said the rules were designed to impose standards on return preparers who aren’t certified public accountants, attorneys or enrolled agents already licensed to practice before the agency.
The idea, promoted by Douglas Shulman while he was IRS commissioner, was to impose minimum standards and help the agency thwart tax fraud.
The agency’s licensing program affects from 600,000 to 700,000 preparers “who are responsible for a substantial number of the more than 80 million returns filed each year,” the IRS said in court papers.
The program required preparers to register with the federal government, pass a competency test and meet continuing-education requirements. A 15-hour continuing-education regime began in 2012 and the testing was set to go into effect this year.
Registration Fees
Almost 100,000 return preparers have registered to take the test and the IRS has collected more than $100 million in registration and competency-testing user fees, according the IRS filing. The agency said it has spent more than $50 million and assigned 167 employees to operate the program.
The IRS also would probably face lawsuits and demands for fee refunds if the injunction isn’t lifted during an appeal, the court filing said.
“All these actions—and taxpayer funds—would be wasted if the Court of Appeals subsequently overturned this court’s decision and reinstated the return preparer program,” the IRS said in its request to Boasberg to suspend the injunction against the program for at least 14 days to allow an appeal.
The case is Loving v. Internal Revenue Service, 12-cv- 00385, U.S. District Court, District of Columbia (Washington).
74 Comments
I, unlike many of the commenters, have only been preparing tax returns for 4 years. I took a summer-long class plus the required 25 hours of CE for the company I work for AND the 15 hours of CE required by the IRS. Each year, I have to maintain these hours of CE. I have a full-time job during the day and work in the evenings and weekends preparing taxes. Although I don't have the years of experience as most of you do, I work hard to maintain a high level of knowledge of current tax laws and processes and procedures to ensure that my clients refunds are processed correctly and timely. I do not agree with making the Return Tax Preparer Test MANDATORY to maintain your PTIN and to prepare taxes if the tax preparer is meeting the CE requirements. And if they are to make it mandatory, why charge? or why charge for retakes? I agree with those who commented that it's another way for the IRS to get money and it's not going to stop fraudulent tax returns. I do not prepare returns that I am not knowledgeable about. The test (or at least the prep tests that I've taken) is on such a wide scope of information, I find unless you've been doing taxes for 20-30 years, you will not pass it. So that leaves those of us out that are just getting started and wanting to grow our knowledge in tax preparation. I usually never comment on these types of things, but this test has caused a huge stress in the tax prep community because not only do you have to TRY and prepare for what you THINK might be on the test, but you also have to pay money that you may not have AND miss a day of work to take the test - hoping you pass. I hope the Courts do not overturn their initial decision.
Posted by: ladyfree4371 | February 9, 2013 1:28 PM
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I think the best thing to do is to go with what the IRS already has. Only Enrolled Agents should do tax. The CPAs and Attorneys may also do so only by taking required number of tax courses hrs every year. Everybody else should not do taxes for compensation. This idea will make everything fair and square--if you want to do tax, pass the EA exam. No one should complain because if you think you are good in doing taxes then the EA exam woild not be a problem.
Posted by: taxxie | January 31, 2013 1:09 PM
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I have been preparing tax returns since 1994. I have had a PTIN from the beginning. I also have been taking CE classes since the beginning. I feel to do your best for a client, you need to know the constantly changing tax updates. I think the IRS should just have tax preparers register for a PTIN and take CE classes. As long as the preparer is in the know, that should be suffient.
Posted by: tigerfinancial | January 28, 2013 2:16 PM
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I have been preparing tax returns for the last 35 years and to be honest with everybody, I felt that individuals that had that kind of experience and a working relationship with the Internal Revenue Service for that many years should have been grandfathered in. I have multiple sclerosis and taking this test was even more of a challenge for me. My health in the tax year 2012 was extremely rough, which included a surgical procedure that I had in early July that just about cost me my life. Once I recovered from that surgery which took nearly 6 months I decided it was time to schedule my test. I took my test on December 13, 2012 and the testing site wasn't exactly convenient for an individual confined to a wheelchair. The question that I have is this, I passed the test and have been waiting for my certificate and according to the Internal Revenue Service I should have received it within 5 to 6 weeks. I have tried calling the Internal Revenue Service procedure line and what is usually normal for them were answers that left me in a black hole. It seems as though no one can answer me concerning when I will receive my certificate because of this court ruling. A ruling that I don't agree with, because why wouldn't you take a test that would show your clients, they have a competent preparer? Anyway, can anybody give me a little bit of insight on what to do about getting a certificate that I rightfully earned?
Posted by: jarunk | January 28, 2013 9:00 AM
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I must agree this is totally ludicrous. I've been preparing tax returns for over 30m years. None of my clients ever had issues with their tax returns. If anything I have amended lots of H & R Blocks returns. I am a small business owner and every time you turn around the government makes up these rules for more dollars. First it was the cost of 65.00 to register your Pin Tin. Where before it was free. Now they want you to take credit courses and an RTRP test. Well I only do this on the side and hold a full time job down. I'm allowed to take the courses at my home office and the company I go through submits them to the IRS. Then why can't I take the RTRP test from my home office. Everything is about how they can raise more monies for their foolish spending. It's ridiculous. By the time I pay for the pin tin, then the credits courses and take time off of my full time job, to take the RTRP I spent over half of what I make doing the income tax returns. We should be grandfathered. I would gladly keep on taking the 15 credits. But shouldn't need to take the RTRP. It's all about IRS making more revenue. Make the ones pay their taxes and we shouldn't need to use, us small businesses. Another way for them to put us out of business. Such a scam (RTRP) and a waste. posted by ka January 27th 2013
Posted by: kawerner | January 27, 2013 6:16 PM
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I live in CA where we have always been required by the State to keep an active license and do 20 hours of continuing education. I really don't see why everyone is complaining about having to take a Federal test and do a little more. If the test scares you away.....you don't know what you're doing and you don't need to be doing it. I've been preparing Taxes for 30 years out of my home, a lot of them for free. It's a ministry not a job.
Posted by: atasmom | January 27, 2013 5:52 PM
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I have been preparing taxes since 1974. I have a high school education. I taught myself by reading lots of IRS publications. Over the years I have done amended returns for many clients that originally went to H&R and other large tax businesses as well as many that had gone to a CPA. Having that education does not automatically make you competent and neither does lack of it.
Of course their are lazy people in any profession. I, like other commenters, think the RTRP is unfair. It should be that those who have been preparing taxes successfully for many years should have some "Grandfathering" system.
The CPA who said the "Mom & Pop" preparers are charging upwards of $500 per return and should use some of that to pay for an education should look around more. I have never gotten even close to that. I don't charge by the hour or by the form. My average is around $100-$125 including e-filing. I have many clients that I've had for more than 20 years, and I just don't feel it's right to charge the hundreds and YES, thousands some CPA's think they are worth.
I don't think education and protection of taxpayers is the real issue. It's MONEY! Money for politicians, money for BIG tax businesses, money for IRS, etc, etc, etc
Posted by: SunshineLJM | January 27, 2013 4:58 PM
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Being a CPA or an attorney does not mean that you are a competent tax preparer. Not having formal education doesn't mean you are not. I'm an accountant but not a CPA and have been preparing taxes since 1995. I hadn't lost one client (unless I fired them) and have never had anyone audited including myself in all those years. Because we were moving across the country when all these changes were made I did not have the opportunity to take the test to become certified so I lost all my clients. No, it wasn't because I was moving because ALL of my clients wanted me to continue doing their taxes. I then decided not to take the test and wait until after I passed my CPA exam which I plan to sit for this fall. I've fixed returns prepared by CPAs all the time as well as H&R Blech. Most of my clients are elderly and have been taken advantage of by the above mentioned preparers. I don't raise my fees much because of my clientele. And, I learned almost everything I know about taxes from reading all those IRS tax publications. I actually enjoy reading them. I have also taken many tax classes and subscribe to several publications that help keep me up to date on tax laws. I believe this is all about money, greed and politics - not protecting the people.
Posted by: IHaveAnOpinion | January 27, 2013 10:32 AM
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Everyone's comments to this ruling is mostly correct. The views argued here are some of the best that I've heard so far. I agree there should be regulations to protect the taxpayers from fraud, but at the expense of the small business tax professional is just wrong. I wont say tax preparer because that's not all we stand for. The professional is the one that will do the due diligence for verification while holding their values true ie: honesty, integrity, ethics, and so on... you get the picture. A lot of practitioners and Americans are quick to blame the current president for all their problems and that is wrong also. I think also that some politicians are the most crooked people on the face of the earth. There is corruption on both sides of the isles. I can't blame all because there are some good representatives in the organization as well that are fulfilling their elected duties. In every organization you will find evil and wrong doings, lobbyists trying to stack the deck, and business leaders manipulating the systems put in place to protect us. Not everything is perfect. CPA's, EA's are not immune by far to these questionable practices; I know first hand about people's ambitions to greed and deception. I started my business in 2009 and made it my mission to learn the good and the bad practices that I will face. I attend the seminars, webinars, course studies to stay current on what's new out there. We can't place the blame solely on the major companies. They are doing what they are designed to do is protect their bottom line. We have to keep our voices heard to protect our rights as professionals in this business. One bad apple does not spoil a bunch. The bad apple can try to spoil another core, but if strong principles are in place, the bad apple will just be tossed out. I have seen first hand the fury the IRS can leash on someone or business that does not follow the rules and commit fraud. It's not a pretty sight! I wrote this material to say that our profession is flawed, its our job to report the bad apples in our midst. The actions these brave professionals did was a small victory to our democracy. You can't step all over the little guy and think they will not rise to the occasion. Keep our voices in the forefront of truth to eradicate the misleading and deceptive practices by the few.
Posted by: jamesgrey03 | January 27, 2013 9:10 AM
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I agree wholeheartedly with everyone on this thread who does not want to see the Court of Appeals decision overturned. There are millions upon millions of tax preparers who don't need to be required by law just to prove to the IRS that they are capable of completing a tax return. This is total non-sense and is wasting our tax payers dollars irresponsibly just to satisfy the Obama Administration's far left liberal agenda. This is a perfect example of another one of those scandals and scams that appear to seem ligitamite, but has obviously proved to be iligitimate. The IRS has no business requiring the majority of innocent tax preparers to test for the RTRP which has no justification for it as the Judge and most of people with common values and morals see it. The IRS is good at 1 thing and they need to stick to it which is accepting tax returns and investigating those returns. It's a wonder why the IRS had to delay accepting returns until January 30, 2013 because they have spent too much time with this RTRP that resembles another socialist movement plotting to control everyone anyone who is just trying to have a livelyhood to pay bills and make a decent living. If I were the IRS I would stick to doing what the IRS does best which is accepting or rejecting returns and sending out IRS letters to taxpayers and forget about appealing the courts ruling. God forgive those at the IRS behind this RTRP scam, for they know not what they do. Also, I forgive the IRS and hope and pray the IRS will publically appologizze for committing this act of deception and move on.
Posted by: johnnydoe | January 27, 2013 4:02 AM
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I have been a taxprepare for over 36 years and live in California. I am so glad that someone did tax IRS to court. I go through Continuing Education and licensing with the state of California every year. IRS should look at the states that already have a program and exclude them from the competency test. I hope that the apeal does not stand. Another way to make money off us.
Posted by: NANAD7141 | January 27, 2013 3:12 AM
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This whole thing is about raising revenue for the IRS. If it was about fraud they would shut down the tax programs that let people do their taxes. These programs promote how easy it is to lie,cheat,and steal. No due diligence is needed. Fake w-2's, stolen ssn numbers, sending refund checks to prison inmates, no one is watching or monitoring them. Get rid of the freebies and cut down on the fraud.
Posted by: Jajbjj | January 26, 2013 10:59 PM
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I have been preparing tax returns for 25 years. I collect CE every year to stay current. I believe education is necessary to stay compliant and to be diligent to tax law changes. However, the IRS and the Obama administration did not put these rules into effect for the purpose of protecting tax payers or because of fraud by mom and pop stores, if they cared about fraud or protection of taxes payers they would shut down the turbo tax and other programs that allow people with no knowledge to file their own. I was in the legislature and it's about lobbyist and what is good for them and yes the makers of the tax programs including H&R Bloch do want the small firms out. They lost alot when the Rapid Refund was shut down. So all of you Smart CPA's you get a clue. If they could shut you down they would. H&R Bloch teaches a six week course to anyone and now they are a preparer,WOW aint that great. Get a clue folks it's about big business. I hope they lose the case.
Posted by: dennisc | January 26, 2013 8:50 PM
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This is a good post, The whole issue is absurd ... the more power you give the government the less freedom EVERYBODY has. Our free market system is more than efficient enough to control incompetent tax preparer's.
Why do we pay $60, who gets the money and what is it for. This too is absurd. What makes you think the IRS (like the President is supposed to) will follow proper guide lines to comply or repeal this decision. They already said that they will use the justice department to circumvent the Congress:
"The Internal Revenue Service, working with the Department of Justice, continues to have confidence in the scope of its authority to administer this program," the IRS added. "It is considering how best to address the court's order and will take further action shortly.
The administration plans to use the IRS to enforce it's destructive policies and the IRS plans to use Tax return preparer's to fulfill the mandates of Obama Care and everything else the Administration wants. WAKE UP FOOLS!
Posted by: mbatchlear | January 26, 2013 5:26 PM
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This is a perfect case of this entitlement mentality. Where are the hardworking Americans who once valued an education?
Posted by: R1976 | January 26, 2013 2:18 PM
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The unlicensed preparers want to receive above market premium professional fees (for example, $500 and up on EIC returns) with no accountability. The excuses about placing the mom and pop stores out of business are just excuses. If these mom and pop stores want to stay in the business then they must comply with the rules. The fraudulent returns continue to be a major problem and the IRS does have a right to enforce their own reporting requirements. And yes, I am a CPA, who holds an MBA, and who takes far above the 40 hours of continuing education per year. People stop being lazy and making excuses! Get the knowledge to properly educate your clients. This is a minor request considering the amount of money you make from these returns.
Posted by: R1976 | January 26, 2013 2:09 PM
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I think the IRS should regulate tax prepares who accept money for returns. I also feel like those of us that have been preparer for 5 or more years should be excepted from such testing the IRS is requiring from us. In the last 6 years, I've had to many returns come back that were not completed correctly, with the client freaking out. Some of these clients tell me they weren't comfortable with the preparer that was doing their taxes cause they didn't ask question for information that the client knew should be included. I always stress to clients this is your money and if your not happy with your return to just pick up your papers and leave! There are way to may people out there claiming to be prepares and they are not. These large company's which I'm not at liberty to name, names (you see their commercials on TV at least 50 times a day) have hired people who know nothing about taxes. They teach them their computer tax program and tell them just follow what the program tells you. And the preparer can't explain why or how the return was done. Their answer to these questions are, I don't know that's just what the computer said. The company's that hire them says "long as your a warm body that can use a computer" you got the job! And CPA are the worst! Yes you go to school for accounting that's great, but you need to learn how to do tax returns so that you deserve that $400 and up bill that you charge your client!
Posted by: Mcox513 | January 26, 2013 4:13 AM
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I agree this is one way to corner the market and eliminate an individual tax preparer . For all these CPA's and all their years of experience and education I personally have had to fix major screw up on simple returns prepare by you high and mighty CPA's. Me and several of my colleagues that are as you all can say ignorant prepares have always attended seminars yearly to stay up on forever changing tax laws before the IRS pushed their guidelines on us. Also, I agree that ignorant tax prepares are meeting and exceeding their clients expectations year after year we must be doing something right. Yes their are some bad apples among us but at the end of the day the IRS fine them, they do their ill jail time and right back to preparing taxes. I feel that more independent prepares should join in on the lawsuit and let our voices be heard along with theirs. Last but not least its ok for H&R Block to cheer your eyeballs out when they do your taxes, CPA's to sit behind their fine desk and charge you by the form to screw up your return, but we individual prepares are swept to side. Yes you can become apart of a franchise so you wouldn't be consider as a individual prepare and all those outrageous fee (franchise fee, x amount of dollars per return, as well as they supplied material at a inflated price) so in this case who has a bigger bottom line. I agree with all this is a revenue raiser and H&R Block joining forces with the IRS with an agenda of process of elimination that's a fact.
Posted by: kgholar | January 25, 2013 9:15 PM
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JRogCPA:
Thank you for your Post. I agree, 100%. Experience is the best teacher. Tax practitioners complement the work of licensed professionals; and, as you say, no amount of formal education can impart the basic human quality that we call "honesty".
In one sense, the idea of trying to regulate tax practitioners as an anti-fraud device is a moot point since it is the individual filer who vouches for the accuracy (and honesty) of his own return, not the tax preparer or consultant who comes to his aid.
Posted by: telepals | January 25, 2013 7:08 PM
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The sole issue in the case is whether the IRS had the authority to promulgate such regulations. Speaking as a retired (or should I say recovering?) lawyer, I think the injunction stands pending appeal and the case will probably end up in the plaintiffs' favor. But that's not the purpose of this post. After my blood pressure retreated from DANGER! to very high to high to normal and even to low - see, I told you I was a recovering lawyer) and I far too long a taste of retirement, I went into tax preparation (I had been a member of the tax court bar) because it gave me something to do and it paid for the travel my retirement budget restricted. I am an EA, since the cost of maintaining my law license would be too high for a part-timer. So I bring a varied background to this discussion I had also practiced in the area of professional licensing (never had a disciplinary case defending a CPA, I although I did represent two lawyers subsequently disbarred). A major difference between most "tax preparers" on the one hand and EA, CPAs and Lawyers on the other is that there is at least one professional body whose purpose is to regulate them. There is no such body for the mass of heretofore unlicensed preparers. While the IRS may have a theoretical jurisdiction, the fact that the OPR was not involved in regulating preparers until the new rules were adopted speaks volumes. (A few states have such. My home state of Oregon has been in the forefront of such regulation, and its standards are substantially more rigorous than those for the RTRP. It may help to explain why the IRS has said that the error rate for individual tax returns is the lowest in the nation). In almost any state I could have held myself out as a tax preparer, regardless of my qualifications. That is why such regulation is necessary. Whether the system under judicial review at present is what should be in place is a discussion I leave for later.
Posted by: jadas_priest | January 25, 2013 5:46 PM
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I am not sure where everyone gets the information that employees of large companies will not have to follow the regulations. I am a tax franchise owner and all of my tax preparers have PTINS and have met or exceeded the CPE requirements. Some have already passed the federal test and we even have company required testing that exceeds the federal test. The only preparers exempt would be for a company owned and operated by a CPA or EA and their work would have to be reviewed by that owner. Most large franchises are not owned and operated by a CPA or EA. I think that would assist the Ma and Pa operations more if they would pass the EA test. I hope is that it will help eliminate some of the people out there preparing For you anti CPA people out there I am a CPA I took the federal test because I would not require my employees to do anything I do would not be able to do. If a CPA is preparing paid tax returns he should spend a large portion of his 40 hours of CPE each year on taxes. I know the majority of mine is taxes and ethics.
Posted by: Dianne K | January 25, 2013 3:15 PM
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It wouldn't be so bad if the IRS would just stop lying about their reasons to do this and deal with that fallout instead of their constant line of BS: "The idea, promoted by Douglas Shulman while he was IRS commissioner, was to impose minimum standards and help the agency thwart tax fraud." I personally know a preparer here in Arizona who was investigated by the State, (which then proceeded to audit three years worth of the tax returns of each his 3000 former clients) and found to be guilty by the court of preparing fraudulent returns. He was fined one Million dollars (which he had the ready funds to pay) and given one year in jail. About three years ago he was out of jail and back to preparing tax returns. He was even given (sold - gotta have that $40+) a PTIN and was allowed to take the RTPT test and become a registered preparer. In the mean time the IRS was auditing he and his brother (partner in the firm) as well as their firm. That led to the discovery of 84 fraudulent EITC returns. Now, what has the IRS done? Fined them $500 per return ($42,000) and they both continue to practice to this very day. So, tell me, how exactly has this Registered Preparer program help in stopping tax fraud?
Posted by: DrHoodoo | January 25, 2013 2:57 PM
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I took the RTRP test and passed it the first time. If they don't get it overturned I hope they allow it to exist as a voluntary classification like the EA. This would give some control over quality of the profession. I feel that the profession suffers from the bad apples. Also I don't feel that the testing is a serious hardship on individual preparers any more than the big companies employees. They want all of their employees to have a minimum knowledge of rules and this one way to weed out incompetant tax preparers. I operate my own tax service and I want to require anyone who works for me to pass the RTRP test. The test isn't that hard if you know the tax laws for form 1040. It is a good way to weed out all the applications I get.
Posted by: MillerRTRP | January 25, 2013 2:34 PM
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Everything that has been said thus far is correct. I have been preparing tax returns since 2007 (2006 tax returns) and I agree, I need the federal and state updates (not just relying on software) to ensure that I am preparing an 'honest' tax return enabling my clients to pay the lowest tax liability possible.
On the other hand, the IRS over step their boundaries by enforcing such law. I truly believe that Congress would have given the IRS the approval to regulate the tax industry but they lost...for now.
I will continue, and advice those of us who have to meet the three requirements yearly to do. For the IRS will win the appeal!
I am for the 'requirements.'
Posted by: Bmore | January 25, 2013 2:08 PM
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Old Goat, I guess I got to you. That was my intent to see who'd bite. If you have been following my comments you would have known the comment about the 350,000 incompetent tax preparers was tongue in cheek. The IRS assumes that all 350,000 are not competent or we wouldn't have to take the test to prove it. They do however assume that all lawyers, CPAs and EAs are competent. I hated this scheme to seize control from the beginning. Now the IRS is whining because they may get sued or have to refund a lot of money and lay off people just beause they did something illegal. Thanks for biting.
Posted by: hisexcellency | January 25, 2013 2:01 PM
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To JRogCPA: Great job with that post you made! As you may or may not have seen I am a CPA myself with more than 30 years experience. Everything you said is 100% true and I could not agree with you more.
Posted by: harshaw999 | January 25, 2013 1:28 PM
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I'm on the side of the IRS on this one! I'm a CPA who owns a small practice. Every year I see returns that are prepared by these tax preparers. The errors are endless. Why wouldn't these people want to attend continuing education classes? I would be afraid to prepare a single return without first attending an update class every year. I'm required to attend 40 hours of class every year and I look forward to learning the new laws and networking with my peers.
Regarding preparer fees, anyone can go to a VITA center or senior center and have their tax returns prepared by competant people for free. I don't see this as a discrimation case.
Posted by: holstentax | January 25, 2013 1:00 PM
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The IRS should agree to all take the exam, or all not to..Its not fair when the IRS desicison is favored by H&R Block and others due to the fact that not all their tax preparer should take the exam..Yes they will read and be trained for 18 hrs at their office out of which, half the time in how to input data in to their softwear, and can go ahead and start preparing taxes..That is not fair, Continuing education of 15 CE, YES i am with you, but the exam, it should be for all, not for selective preparers.. Thank you...
Posted by: hjubran | January 25, 2013 12:36 PM
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Hey Accountants. Did you notice this article's claim that there were 100,000 people tested and $100,000,000 in fees collected by IRS? That's $1,000/applicant to the IRS. The math doesn't work. Obtaining a PTIN costs $64. The RTRP exam costs $116 (of which IRS gets only a part and Prometrics gets part). That leaves an amazing $820 unaccounted for! Even with study classes, materials or CPEs (which don't go to IRS) this just does not work mathematically.
You can't believe everything you read, I guess.
Personally, I have seen so many poorly prepared returns from other firms that I think the public needs the basic protection that is offered by testing.
I like to know that the doctor who writes and the pharmacist who fills my prescription meet some basic requirements. Same with the plumber who installs a new toilet, or the electrician who works on my home's wiring. Many people enjoy a nice warm fire in their home, if it's in the fireplace. Not if it's in the basement!
There are two types of licensing goals: competency and competition. Competition licensing systems are designed and supported by members of the club (those with licenses) to keep new comers out. For example, state Bar Exams can be a device to limit the number of applicants admitted to the profession. Many competent lawyers cannot pass the bar in popular states like CA and NY. It's not because they are not competent, it's because there are already too many lawyers in those states. Other systems are based solely on competency. You get enough right answers and you get admitted.
There have been no legitimate claims that the IRS system is designed to limit the number of practitioners for competitive reasons. The test is based on competency. The RTRP exam does not really benefit big firms like H+R Block since they still need low-paid preparers in their volume based business model.
In my opinion, the Libertarian "Institute For Justice" has not done the American public any favors by removing the closest thing devised that offers legitimacy to our profession.
Much of the plaintiff's case was that the testing was an unfair burden. The judge's decision was principally that IRS did not posses the authority to set up the testing program. These are wildly different issues.
If the IRS system pushes practitioners to become more professional and knowledgeable, what's wrong with that? And really, is $180 (tax deductible) keeping anyone out of the business?
Posted by: LarryFischel | January 25, 2013 12:17 PM
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I posted a comment - it did not include any foul language or any detrimental statements about any official or fellow tax preparer, yet it was not published in the comments. Please let me know why not.
Posted by: Snowshoe | January 25, 2013 12:07 PM
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we have enough damned regulations already. fraud will continue as long an individual can still prepare his/her own taxes anyway
Posted by: Unknown | January 25, 2013 12:02 PM
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I regret to see this court ruling, I think all Tax Return Preparer must have a continuing education and pass that examination, that will educated all this fraudulent tax preparers, think about it, You just work 4 months a year, just take some of your Vacation TIME To STUDY. Don't be lazy. Why to much controversy, If you are a tax expert, just pass the test.
Posted by: Cramirez | January 25, 2013 11:53 AM
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I have been complaining to the IRS ever since they imposed this ridiculous requirement. In California, we have been required to pass continuing education testing for years, so for us, this is a redundancy. AND, if one can pass the continuing education testing requirements, then one should already be deemed "competent". Why do we need a separate compentency test that just ends up costing us more money? To top that off, the nearest testing site to my location is a 6 hours round trip mountain driving, so we're talking a tank full of gas. More wasted money spent. I agree that the IRS seems to be favoring the large tax prep companies, because their preparers are not bound to these requirements - only the overseers (supervisors/managers). If this ruling is, in fact, overturned, it needs to be so with the stipulations that EVERYONE has to bide by the requirements. I also agree with OldGoat's posting - I, too, have had to correct a number of returns done by so-called experts (CPA's, tax attorneys). They really don't know what they're doing when it comes to returns. Their expertise mainly lies with rules & regulations and investments. I even had to amend a return done by a retired IRS agent. Go figure. I asked the IRS, "are you trying to put us little guys out of business?" I think they are.
Posted by: catkimball | January 25, 2013 11:24 AM
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I have been doing taxes for over 40 years and have found the greatest number of mistakes on tax returns are done by CPAs and H&R block. And, of all the IRS published cases of fraud or cheating done by tax preparers, in most cases they are CPAs. And I don't understand where these so-called "experts" of CPAs, EAs, Enrolled Agents, and H&R Block get off charging the fees that they charge. I charge $100 to do a return and it doesn't matter how many pages are involved. And that includes federal and state and electronic filing.
Posted by: k1bkj | January 25, 2013 11:23 AM
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I just read the comment by hisexellency and it made my blood boil. He assumes lawyers and CPAs do the job right and I can assure you from experience that they all don't, some make big blunders because I, as an independent, had to correct them. One lawyer's work I had to fix was not even a tax attorney, his specialty was real estate! And some CPAs who do corporate work have little knowledge of some individuals tax issues. I don't like paying all these extra fees for CE, PTIN and the exam; I have a small practice but I do it, and my position is if anyone has to pass the test and document their CE's, then ALL should do so.
Posted by: OldGoat | January 25, 2013 11:01 AM
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AHHHA! I see what the incentive is now "$100,000,000 collected already" by the IRS. Very lucrative, indeed! Yes, it is made to benefit the large firm preparers and drive out competition. Already, over 80 million tax returns are created by the more than 700,000 smaller preparers. I'm guessing that H & R Block and all the others would love to have their part of those 80 million returns. And previously the IRS said the error ratio did not warrant the time and expense of setting all of this up when Congress proposed it but now they are in favor of it??? What's rotten in Denmark? Sounds very fishy and it has little to do with the unlicensed preparers...but rather, all to do with money and greed from the IRS on down to the huge tax-preparing conglomerates that want a corner on the market and are willing to buy it. After all, they won't license all the folks working for them....they will merely by-pass all that and sign the returns as though they had over-sight on them and go on charging exhorbant fees for returns that are some of the worst I've seen yet.
Posted by: ldrider1@msn.com | January 25, 2013 10:41 AM
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As a tax practitioner for the past 30 years, I applauded the move to education for tax practitioners. I have a small office with 8 tax preparers and some receptionists and we see all kinds of errors and problems created by incompetent tax practitoners. I say either run them out of business or educate them. I am what they would call a "Small Mom and Pop" firm but I loved the educational aspect of this and I regret to see this court ruling.
Posted by: James_Clayborn | January 25, 2013 10:38 AM
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Very interesting series of posts. As a CPA with 37 years of experience in the industry, I don't think that, just because I have a state license and must complete 80 hours of CPE every two years, I'm God's gift to tax preparation. As a nation, however, we have put a lot of stock in credentials. Some of that is good and helpful; some is overdone. Personally and professionally, I'm glad there are tax preparers of many backgrounds and levels of expertise. I refer inquirers every year to commercial preparers, because the inquirers don't need my expertise and certainly shouldn't have to pay for it. Individuals and families should be free to go to whomever they wish for tax preparation help. They should perform their necessary due diligence the same way they would check out anyone else providing them a service.
It's one thing for an individual to prepare his or her own return. It's quite another for someone to receive money for doing it for someone else. I believe that the very fact that cash changes hands places the preparer on a different, higher plain of reasonable expectation of competency than an individual has for his or her own return.
Ultimately, I think the individual preparer market is driven by the relationships between preparers and their clients. If an unlicensed individual preparer successfully does his or her job for clients year after year without running afoul of the taxing authorities, that tells me the service must be good and the clients must be satisfied with it.
Fraud isn't a function of education, training or licensing. It's a condition of the heart that's found in all levels of all professions. Reputable organizations of professionals do their best to weed out fraudulent members to maintain the public's confidence and trust in the organizations' other members.
CPAs, tax attorneys and EAs provide a vast array of essential services to the public for commensurately-varying levels of fees. There is no way these three groups could handle all the needs of the American public. Commercial and individual preparers play important roles, too.
The best solution? A flat tax the return for which could be done online in 15 minutes. Unfortunately, the chance of that happening is zero, because Congress legislates social policy through the tax code. Those furry little gnomes are not about to give up that kind of power.
Thank you for the opportunity to share these thoughts and the privilege to read those of others.
Posted by: JRogCPA | January 25, 2013 10:37 AM
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I don't understand the complaints about the costs associated with complying with the RTRP program, especially after passing the test. You can get the necessary 15 CE credits for $29.99 from Aardvark Tax (I'm sure there are others). The PTIN fee (which I think is kind of a rip-off, since it used to be free) is $64. How much out of pocket is that after being claimed as expenses on your Sch C? Sixty bucks? You can't charge your clients $5 more a piece or just suck it up? In Oregon, we have had to be licensed as tax preparers for decades. The license/business license is $165 by itself plus 30 hrs of CE, so around $50-$70. So quit your whining!!!
Posted by: janek51 | January 25, 2013 10:37 AM
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This is all about the MONEY,not about better standards. Until EVERYONE must play by the same rules,this should NOT be allowed just to benefit the TAX Corps.
Let this new designation be a CHOICE...What a conception! It is a choice to be a CPA over an Accountant..Whats the Difference?
Posted by: sundayp | January 25, 2013 10:37 AM
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Like I said in a prior comment, I never thought RTRP was going to do a damn thing. Given all the comments in every direction I'm beginning to agree somewhat with hisexcellency. Maybe the profession should be divided up. How about mandating that anyone who becomes a preparer be required to at least attain a designation of EA? Alternatively, how about disallowing anybody who's less than an EA to handle anything beyond Sched A and B? Let the unregulated/unlicensed, "tax shacks", and chains handle all the simple stuff (except for the few upper designations they might have among them). And send the EAs, CPAs and JDs the Sched C, D, E and so forth along with corporates, partnerships, etc..etc....
Understand that I am speaking against my own interest here since I'm an EA with a predominately "simple" practice. Or perhaps it could be a rule for new EAs and so forth.
This profession is like a child. You have to want it. If anyone wants it bad enough they'll do the work for an upper designation. It's hell. But if I did it ANYONE can do it. And I did it somewhat late in life.
Posted by: andystaxes | January 25, 2013 10:36 AM
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With this all said and done, the court of appeals is going to uplift the ruling and reinstate the RTRP because too many organizations are going to lose billions of dollars. Just look at all the publications and test fee money that have to refund. This is just a step back for the IRS and at the end, the IRS is going to be on top again. As I was driving home on yesterday, I noticed many signs up for preparing taxes. These businesses were not there last year. There are so many "mom and pop" tax businesses. There are some that just start a tax business one year and close down just to get fast quick money. Now what the IRS can do is make the new startup tax businesses get certified to prepare taxes. Because there are too many new tax businesses that just come out around tax season. I know this lady that used to owned a franchise with Colbert/Ball and now she's independent, she charges taxpayers $400 for preparing taxes,it does not matter what form. She has been in the business longer than I have and she's aware of the tax laws and she still offers to max out taxpayers returns. Types of businesses such as "mom and pop", and including businesses like the lady I know; hurts tax businesses that are preparing tax correctly and follow the tax guidelines as well as new provisions. My discussion in this matter is up and down because the IRS as well as the court of appeals should look further into the mandate of RTRP. There are many tax preparers that are not good test takers. For me, I can study and study but when I take a test, I just freeze. Then also the test has 120 questions, really. If they going to mandate the RTRP test, they should cut down the questions as well as the fee. At first, I thought they should allow tax preparers to take the test from one's local station, such as home/office; instead of going into a testing location, but I can see people paying someone else to master the test for them. The big chains like Jackson Hewitt and H&R Block are going to support the IRS because they want the small tax businesses out of business because people are leaving them for one; they are too high and people do say that some of their tax professionals perform taxes incorrectly. My sister works for the IRS and she gets taxpayers all the time complaining about the big chains.
Posted by: NICKIE | January 25, 2013 10:24 AM
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I hate those returns prepared by people who have no knowledge of tax, but that does not mean IRS can misuse their power and do whatever they want to do. This is America, and people do not want to see government power to people increases every day. Talking about H&R, I have a client referred by her friend last year. she was with H&R for several years. When she came in, she brought whole box of lunch receipts. She only has one W2, one child dependent, no schedule A or anything. She told me H&R asked her to save all her lunch receipts, etc. She showed me her previous years return. For our office, her return should be just several pieces of paper, but H&R print huge bunch of papers with fine print. She never read it, and you can not imagine she was charged $490 something and she never thought its wrong, because she got so many papers, even most of them are garbage. So what do you think is a qualified preparer? H&R have all licenses, all qualifications. We, ourselves, are taxpayers, too. Why we should let that government agency do whatever they want to us? I applaud judge's decision and I thank the 3 independent prepares in the case.
Posted by: tristatetax | January 25, 2013 9:58 AM
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One only needs to look at the large number of "pop-up" tax return preparation locations that open each tax season. Most are operated on a seasonal basis by individuals and companies who only prepare returns during the tax season and who have little if any training or oversight and who's only motivation is to generate quick income in a short period of time.
Having been in the accounting and tax preparation business for 40 years, at both the national CPA firm, regional and local CPA firm and sole practitioner level. I believe that there should be required minimum competency and registration requirements for those who put themselves in front of the public as tax preparers. Having taken and passed the RTRP exam, having not taken a license exam in over 20 years, I found it to be fair and adequately test the minimum levels of competency to prepare a tax return. I support the IRS regulation and testing of preparers, as those of us who do this as a profession and depend on the profession for their livelihoods.
Posted by: Tkirks | January 25, 2013 9:33 AM
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I am a "rule follower" so I have already taken and passed the test and taken the CE hours for 2012. However, I do believe that this "preparer oversight" program is accomplishes 2 things and they are intentional: (1) It benefits CPAs, EAs, and the big tax prep companies and drives out much of their competition and (2) It expands the IRS's "empire" immensely. The IRS has, in the past 4 years, taken over the administration of 5 government agencies and will be adding Obamacare to its portfolio this year. I believe that Congress should have been the part of our government that considered and, if necessary, passed this licensing scheme. It was only about 5 years ago that Congress did, in fact, consider a similar scheme but the IRS appeared before Congress and said that it was too expensive and was unnecessary because the amount of tax preparer fraud did not justify the expense of such a program. What changed? I believe the change came with the Obama Administration which gave Bureaucrats the idea that this is their "time" to expand their powers and operations. You may recall that, in addition to licensing us. the IRS is now making us an arm of the IRS to verify and collect information from taxpayers as we prepare their taxes. This frightens me much more than just the licensing, but they are all connected.
Posted by: mrdocuman | January 25, 2013 9:33 AM
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I agree that this requirement only helps the the large companies. Our small office requires everyone to be licensed so we would not get in trouble when a data gatherer gives out any kind of advice that would make them a paid preparer in the eyes of the IRS. I also dropped my membership in the National Association of Enrolled Agents because I asked them to take a stand against this regulation and they refused to do so.
Posted by: Timothy S | January 25, 2013 9:32 AM
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I consider tax preparation a profession. Professionals should be educated in their field--especially in an ever-changing field such as taxes. How many of us want our taxes prepared, tonsils removed, teeth filled, by someone who cannot show even basic knowledge in their profession? As an EA, I resent those "kitchen table preparers" who prepare returns for a few dollars with no thought to ethics or due diligence. It took a lot of effort and money to earn my Enrolled Agent certificate, and I continue to learn throughout the year. If tax prep is just a job, give your uncle twenty bucks to do your taxes.
Posted by: frostr | January 25, 2013 9:01 AM
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I was trained by my dad 33 years ago, back then you prepard returns by hand and adding machine. had to know that Sch C profit went on Sch SE line 2 and Line 12 Form 1040, and on Line 27 form 1040 half of the self employment tax,you had to know the standard deduction amount and exemptsion amount, look up the tax on the charts, do the Sch A and use the amount that was larger unless MFS and Spouce used standrd deduction. But now days the computer takes care of that. anyone can us software but is the return correct? That is why we need to get CE and hay maybe a test to see if we know anything with out the softway maybe make you do a return with Sch C, Sch E, and Sch F by hand how many can do that and get it correct. Just saying i can.
Posted by: scott4096 | January 25, 2013 8:53 AM
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Ok - Wow - lot's of comments in many directions - hisexcellency you too want to get rid of the healthy part of competition.
I have been doing taxes for over 30 years. Shades of gray exsist everywhere. Bottom line that is tax code complexities and stupid stupid allowance of the tax code to be so far gone and outdated in many cases.
But the crux of the situation isn't fraud in my opinion. It is Congress. If any of the rest of the world had to deal with an agent or attempt to settle a bogus letter - as one writer stated with 3 to 5 letters of our own - the problem is:
IRS EMPLOYEES NEED EDUCATED!!! I for one am sick to death of dealing with an idiot that doesn't have a clue. I think they put the people in front of the public with eyes like a deer in headlights intentionally.
I am sick of being told "Well the computer says. . . ." And it is clear that if only 60 some percent of calls are being handled and that is after enourmous amount of wait time (what do they think they are like doctors??) the problem is Congress cuts cuts cuts and the service just sucks sucks sucks
Posted by: Lenore | January 25, 2013 8:26 AM
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To Jeff Jaguar, Please share your source of the 15 Credits for $30. I am also in NY and passed the exam on 1/8/13. The $100 fee for NYS is outrageous. I do only about 15 returns and the expenses of the RTRP program are a problem as I cannot pass the expenses to my clients. Thank you.
Posted by: dandonoghue | January 25, 2013 8:23 AM
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My biggest problem with the testing and classes is that the big box companies hirer incompetent people who have no knowledge and yet prepare taxes and you know that they shouldn't be allowed in a tax office. In point in our area one H & R Block office hired a lady for nights that runs a yogurt machine during the day and isn't to good at that job even. DO YOU REALLY WANT SOMEONE LIKE THAT DOING YOUR TAXES? And then we have the man who lost his CPA license for incompetence and doesn't sign the returns and only charges 50 or 60 dollars and people still go to him the IRS knows about what he does and turns a blind eye. Makes me sick. Regardless of the rulings I will continue to take update classes as well as the RTRP test if it is given . I want my clients to know that I am not afraid of education and I am competent to do their taxes.
Posted by: emmakeator | January 25, 2013 8:09 AM
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The best thing to do is to go to the lawmakers and have them just make a law that tax preparation shall only be performed by CPAs, lawyers and enrolled agents. How easy and smart is that?By eliminating the 350,000 incompetent preparers, system administration will no longer be burdened. The IRS could lay off thousands of unnecessary employees. That will solve all the issues that the IRS recognizes. Accuracy, fraud, incompetence will no longer be a focus. Audits will be non existent and all returns will be correct. Utopia is just around the corner. Just a few more rules should do it.
Posted by: hisexcellency | January 25, 2013 7:43 AM
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Having read the ruling, I find it hard to believe that one of the preparers claims that raising their fees would cost them clients if they had to comply. Has this preparer been charging the same fee since they opened their office? They have NEVER raised the fee even once?
Isn't it important that those who prepare tax returns for a fee have a minimal compentency, know the tax law(s) so they can prepare tax returns correctly? There are so many who just get a software program and accept what the program turns out without making sure that it is correct.
CPAs, Attorneys and EAs have to do continuing education. If it is such a hardship to do continuing education, financial or otherwise, to make sure you are doing what you were hired for by your clients correctly from the outset, then perhaps you should be doing something else.
Posted by: fishcpa | January 25, 2013 5:56 AM
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People, as a professional Tax Accountant, I see every day horror stories, the public needs to know that a bad return whether it was self-prepared or paid is a bad return regardless and is subject to very hard scrutiny from our lovely people employed by the IRS that sometime the also fall in the category described below. Now I really can't see the future, BUT, all these changes are pointing in one of two directions: - Tax law overhaul. If this is actually coming down the big players are getting themselves ready to make as much profit as possible. On the other hand if it does not happens they still win by eliminating a big portion of the competition.
- There is no intention to change the tax code, in this case I do agree with setting some standards for paid prepares, after all, paid prepares are considered professionals by the general public, (even if they don't know how to read, wright, add, or subtract and don't even speak English but since they are employed by HRB, Liberty, etc. etc. etc. "They must know what they are doing?"
Personal conclusion: The idea has been set forward, if not this year the next it will happen, (it generates income for Uncle Sam) So regardless of how much we talk about it and give our opinion let us study the outcomes, analyze which way they are pointing to, and prepare ourselves and/or our business for the future.
Posted by: LTA6990 | January 24, 2013 7:33 PM
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There are two problems. Accounting and tax preparation are not the same thing. Just because somebody has a CPA doesn't mean he or she is a better or more knowledgeable than a person who studies, has done taxes for 20 years and simply prepares taxes. As a matter of fact, in almost all cases, all people who prepare taxes today rely on the software because it is impossible to remember where every last adjustment begins to phase out, especially with the passive loss rules which were introduced in 1986 and doubtfully perfectly understood today by even the IRS. And then there is the AMT asnd tracking that.
And the fact is there are are many things regarding say unreimbursed business expenses where two people can differ completely as to whether it is a necessary and ordinary expense. CPA's, in general and yes it's a generalization, tend to be more conservative with these things and it doesn't make them right if they don't deduct this and an ordinary tax preparer does. They are two different shades of gray of course.
Frankly I'm ambivalent as to this whole thing. NYS now requires me to pay $100 not for training but simply to get a number to prepare taxes (although people who live outside NY can prepare NY returns and not have to worry about that. Same goes for California. I do a bunch of California returns yet am not licensed by California as I live and practice in New York.
I took the exam, passed it, found a relatively cheap outfit to get the necessary 15 credits for less than $30 done open book online. Frankly, it doesn't lead to better tax returns. It's just a money grab and we all know it.
Posted by: JEFFJAGUAR | January 24, 2013 7:29 PM
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Here is what needs to be looked at. What is the average charge by a CPA, EA, or a Tax Attorney on an hourly rate basis for Tax Return preparation? Now, what is the average hourly rate for an ordinary tax Return Preparer?
Don't give me the Bull Shit that three elite groups can provide better service with more knowledge, because I know, you know and they know, that the majority of the work will be done by secretarys, and clerks who are making a little more than minimum wage and have little or no knowledge of the tax law.
Most of those EA's, CPA and especially Tax Attorneys, do not know anything about the filling of a Farm Tax Return, nor how a farm operates, nor the necessary expenses that are required. But, they will still send the Tax Payer a bill for hundreds of dollars, even though they did nothing but sign the return.
This is just an attempt by the Obama administration, after years of refusal by other administrations, to further control every segment of the population that they possibly can. The IRS has always held the position that they cannot do this, and only under Obama and Geithner did they reverse their position.
I hope that the courts uphold this ruling as being Statutorial Overreach.
Posted by: Mhammer491 | January 24, 2013 7:23 PM
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It is obvious that the EA's, Tax Attorneys, and the CPA's wanted this to remain, because it limits their competition. You can forget their poor mouthing that the ordinary preparers need to be tested and required to obtain continuing education, so that the public is receiving quality service from their tax return preparer.
The truth of the matter is they are members of the "Educated Elite" who feel superior to the rest of us, even though they have no idea of our experience level, educational level nor level of expertise.
I have a degree in Accounting, and I would venture that many Ea's and Tax Attorneys do not. I have never met an attorney that knew jack squat about tax law. And most CPA's do not have time to deal with the various Small business returns, nor the Farm Returns that are required in our area. And they all charge more than these people can afford. Our farmers are small, usually have a job off the farm, and their wives work as well. We are a produce growning area, with a few small cattle farms. CPA's will not look at a return for under $250.00 and I have never charged that much for a one.
The people are getting ripped off by these large firms and the IRS is only adding to the bill.
Posted by: Mhammer491 | January 24, 2013 7:16 PM
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I have found more mistakes on returns prepared by tax companies than individual preparers -- we individual preparers (except those who commit fraud) make sure we know what we are doing as we want our clients to come back year after year and we do not want to pay preparer penalties. I doubt if this TEST will get rid of the fraud as they will just do them fraudently. We should not have to jump through HOOPS because the bad preparers make us all look bad.
Posted by: jtabh | January 24, 2013 7:09 PM
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The IRS overstepped it's authority, just as many federal agencies have done under the Obama Administration. Gun Control, The Fast and Furious fiasco, the excessive number of new regulations and all of the Executive Orders that Obama has issued should all be challenged in the courts.
The EA's, the CPA's, the Tax Attorneys, and now Turbo Tax and others are jumping in to defend the IRS because they had all received a sweetheart deal! They have the status "Allowed to Practice before the IRS", and normal, ordinary tax preparers do not, therefore these people can charge and arm and a leg for a simple W-2 1040A Tax Return, and God help you if you have other forms that need to be included.
A bad regulation is a bad regulation, period. And one issued without clear Statutorial Authority is anti-American, no matter how worthy the cause.
Posted by: Mhammer491 | January 24, 2013 7:09 PM
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The IRS is basing their appeal on "would result in a substantial disruption to tax administration," . Come on! The program hasn't even got started yet. Who are they trying to kid. And how could they possibly have spent over $50 million to get the program started? Who's looking into their spending?
This has been a joke from the start. CPA's and EA's with all of their fine qualifications and educational attainments are allowed to practice before the IRS. Tax preparers can't do anything more then show up during an audit and discuss how they added up the numbers based on the, hopefully, true and accurate information they received from the tax payer.
The IRS is trying to justify a barrier to entry for tax preparers that has no merit because they would rather make more money from tax payers who don't file correct returns! The IRS says they are not responsible for the tax advice that they give to tax payers regarding any particular position! The IRS has tapped into a $100 million a year cash flow and they don't want to give that up! They want to eat their cake and have it too and they want your cake as well!
Sure we need standards. Sure the tax preparer needs to know what he/she is doing for his/her protection as well as the tax payers. The individual states should be regulating this, not the IRS because the IRS is not responsible!
Posted by: Taxman32 | January 24, 2013 6:56 PM
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I strongly support the minimum standards to help the IRS and help us the Professional Tax Prepare to be more competence by REGISTERING ANNUALLY and do the CONTINUING EDUCATION. The State Bar requires continuing education, as well as the CPAs and EA are required also. Definetly, we the Tax Prepare must do something too. This is an Win-WIn situation for the IRS, the Taxpayers and we the Tax Preparers.
Posted by: LaRazaTaxes7 | January 24, 2013 6:21 PM
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I believe these commenters are missing the point. I believe if someone is paying for a service they should be getting value. If they go to a preparer there is an assumption that the person they are paying their hard earned money to has sufficient knowledge to prepare these forms correctly. There needs to be some basic knowledge in order to come close to this level of competence. As a long time unlicensed tax preparer I have seen too many butchered returns prepared by "fast food" outfits who gave their staff a two -four week training course. These people can prepare a 1040 or 1040A but they are not trained for more complex returns, THOUGH THEY DO THEM. Additionally, as we all know, there are preparers committing fraud. This costs us all, especially our industry's reputation. These are the major problems. This test is not difficult to someone with minimum competence. We who are competent should be welcoming this and the annual cost ($63) is not that much. Having some sort of minimum competence as well as being registered for accountability gives our profession, as a whole, more reliability and credibility.
Posted by: davidshatz2 | January 24, 2013 5:55 PM
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In my state you have to have a license to cut someone's hair for pay, yet it is acceptable to take compensation for filling out a someone's tax return without even the appearance of competency. I've always thought this to be quite odd...
Posted by: dkeller496 | January 24, 2013 5:42 PM
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The truth is a whole lot of the people commiting fraud have started using the free file and softwares like Turbo Tax. The IRS should monitor those returns closely. I don't understand how the average Joe can complete own their return using the store purchased software, RELYING ON THE SOFTWARE and not knowing the law. My suggestion is for the IRS to require the PTIN but also require finger printing and the continuing education. Also fix the EITC.
Posted by: E1 | January 24, 2013 5:22 PM
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leocpa-
I've seen some bad returns also and the best I can remember they were prepared the the same people that lobbied for this.
Posted by: WCSCPA | January 24, 2013 5:20 PM
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It is good to see the little guy win one for a change, but the vested interest in regulation, the Tax Prep Complex, has a strong incentive's to help eliminate competition. As always, the BIG Accounting Firms never met a regulation they didn't love, as it helps pump up their hourly billings. "I am certified by the Government, therefore I can charge you more!!!"
I love this quote from an article by Tax Girl at Forbes
"Just because a person has the initials CPA or JD after his (or her) name does not mean he knows his arse from his elbow when it comes to 1040 preparation."
I hope the Court lets the Judge's ruling in favor of Love Stand. That way ex Commissioner Shulman can remove another disastrous achievement from his resume, like FBAR penalty application, OVDP and FATCA. His myopic offshore focus, let the fires of ID theft, Child tax credit and Prisoner fraud burn in the homeland, and then in typical government action, overreached to impose new expensive and complex regulations that benefit a vested group, protect them from competition and doesn't really deal with the core problem: TAX CODE COMPLEXITY
Posted by: Just Me | January 24, 2013 5:14 PM
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1.)If the main argument from the IRS is wasting $50 million and and finding work for 167 employees if the program is illegal - they should wake up and smell the coffee. That is chump change for a gov't agency to waste!
2.) I agree in part with what harshaw999 said in regards to fixing returns. I was(until the mandate) an unregistered preparer. I have had and continue to fix returns from incompetent or at best error-prone preparers, including some CPA's. I see this year as the potential for more errors than ever before. I believe the IRS can register and perhaps even require CE's. But looking at the law, it looks like they stepped in it.
Posted by: IndiePrep331 | January 24, 2013 5:12 PM
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i have seen a lot of poorly prepared returns. I think it should be more regulated than it is now.
Posted by: leocpa1946 | January 24, 2013 5:01 PM
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I strongly support the minimum standards to help the IRS and help us the Professional Tax Prepare to be more competence by REGISTERING ANNUALLY and do the CONTINUING EDUCATION. The State Bar requires continuing education, as well as the CPAs and EA are required also. Definetly, we the Tax Prepare must do something too. This is an Win-WIn situation for the IRS, the Taxpayers and we the Tax Preparers. Isabel Rodriguez 801.518.0156 - LA RAZA TAXES!!!
Posted by: LaRazaTaxes7 | January 24, 2013 4:59 PM
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pete8743: You are allowed to represent yourself in the Court of Law, yet you may not represent any other unless you are an attorney who has passed the BAR and are licensed by the state. You see, my friend, certain fuctions can ONLY be properly performed by trained, and licensed, personnel. Preparing taxes is one of them. Stay well; walk good always.
Posted by: ACCTDY | January 24, 2013 4:59 PM
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To pete8743: the problem with that rationale is that there are a heck of a lot of preparers out there that simply don't know what the heck they're doing. I have been a CPA for more than 25 years and in public accounting for more than 30. Throughout my career I could not begin to tell you the number of times I have had to fix returns prepared by unlicensed incompetent preparers. While your return may be relatively easy to prepare, a lot of them out there are not. And, that is getting more and more true as time goes on. The ever more complex tax code makes it impossible for people who just walk in off the street once a year during tax season to prepare returns for some firm that does not provide or require some kind of training. The real loser in that situation is the poor client that hired them with the expectation of an accurately prepared return. They are the ones that get hit with the penalties and interest and additional taxes that can result from an incorrectly prepared return. As I said, I have had to fix countless of incorrectly prepared tax returns over the years so quite honestly, they generate revenue for me. However, I was the first one standing in line applauding the IRS for instituting the licensing regulations. I have literally seen people's lives destroyed by badly prepared tax returns. It has to stop.
Posted by: harshaw999 | January 24, 2013 4:47 PM
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Thinking aloud...Pete8743 makes a valid point. What about the taxpayers that prepares their own taxes at home with utilizing tax softwares, such as H&R Block, TaxAct (to name a few). These individuals can also commit fraud on their taxes. So how the IRS is going to get around that issue??? This is all about MONEY MONEY MONEY for the IRS. We as business owners as well as taxpayers are only working for the IRS because they are known to GIVE and TAKE.
Posted by: NICKIE | January 24, 2013 4:35 PM
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I hope the Court of Appeals DO NOT overturned the court's decision. Hopefully, the Court of Appeals will allow return preparers an option to take the RTRP test; instead of allowing the IRS to mandate it; which will allow the IRS to not be overstepping its authority pertaining to the 1884 law.
Posted by: NICKIE | January 24, 2013 4:27 PM
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Tax returns are perfectly acceptable being prepared by "ANY INDIVIDUAL TAX "PREPARER". By Law , any person can prepare their reurn. They do not need to "PROVE CAPABILITY". If Preparing Your own return is acceptable preparation of a return, than any individual preparer already has authority to prepare returns. NO licensing is necessary. This is only a revenue raiser.
Posted by: pete8743 | January 24, 2013 4:19 PM
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