In a stunning blow to the Internal Revenue Service’s efforts to regulate the tax preparation profession, a federal judge struck down the IRS’s licensing requirements for tax preparers on Friday, including testing and continuing education.
Three independent tax preparers—Sabina Loving of Chicago, John Gambino of Hoboken, N.J., and Elmer Kilian of Eagle, Wisc.—joined forces with the Institute for Justice, a libertarian public interest law firm, in filing suit against the IRS in the U.S. District Court for the District of Columbia.
U.S. District Court Judge James E. Boasberg ruled against the IRS and in favor of the tax preparers in enjoining the agency against enforcing its Registered Tax Return Preparer requirements.
“Today’s ruling is a victory for hundreds of thousands of tax preparers across the country and the tens of millions of taxpayers who rely on them to prepare their taxes,” said lead attorney Dan Alban. “This was an unlawful power grab by one of the most powerful federal agencies and thankfully the court stopped the IRS dead in its tracks. The court ruled today that Congress never gave the IRS the authority to license tax preparers, and the IRS can’t give itself that power.”
The opinion is available online at http://www.ij.org/images/pdf_folder/economic_liberty/irs_tax_preparers/irs-opinion-1-18-13.pdf. The court enjoined the IRS from enforcing its new licensing scheme for tax preparers. The ruling does not affect CPAs, Enrolled Agents and tax attorneys, who were exempted from the RTRP regime as they are already regulated under Circular 230 requirements.
“Through these regulations, the IRS set itself up as king and sought to license hundreds of thousands of tax preparers without being authorized to so do under the law,” said Institute for Justice senior attorney Scott Bullock. “But as Judge Boasberg noted, under our system of law, ‘statutory text is king.’”
Former IRS Commissioner Doug Shulman made tax preparer regulation a priority, aiming to root out tax preparers who were unqualified, filed fraudulent refund claims and even cheated clients, with the further goal of improving tax compliance. Shulman ended his term last November and is now a guest scholar at the Washington, D.C., think tank, the Brookings Institution. His successor, IRS Acting Commissioner Steven T. Miller will now have to deal with the fallout from the lawsuit.
Boasberg recognized that the IRS recently did a “flip-flop” with regard to its ability to license tax preparers, the Institute for Justice noted, declaring for years it did not have the authority to do so but only recently claiming that it did have that power.
The IRS can appeal the ruling to the U.S. Court of Appeals for the District of Columbia Circuit. The IRS had no immediate comment on the ruling, according to IRS spokesman Dean Patterson.
“They may very well appeal, but the District Court ruled that the IRS is enjoined from enforcing the RTRP licensing regulations,” said Alban. “Assuming the ruling stands, tax preparers no longer are going to need to comply with the IRS licensing requirements. It returns things to the way they were before the IRS passed those regulations in the first place. No longer do you have to get the IRS’s permission to work as a tax return preparer.”
He noted that the IRS’s continuing education requirements only just went into effect on January 1. “The timing on this really couldn’t have been any better,” said Alban. “Tax preparers should be able to prepare tax returns in this 2013 tax season without getting permission from the IRS. Tens of thousands of tax preparers who would have otherwise been put out of business, including two of our clients, can now continue to prepare returns.”
All three prongs of the IRS tax preparer regulation regime were affected by the ruling, including the testing, continuing education and RTRP registration requirements. However, the Preparer Tax Identification Number, or PTIN, which is part of the registration requirements, is not affected by the lawsuit.
“Anything that’s part of the RTRP regulations is struck down by this decision today,” Alban explained. “The PTIN is a separate regulation and it’s done under separate statutory authority. It’s a ‘shall issue’ type of permit. If you pay the fee, if you pay that amount of about $65, you’ll get a PTIN. The IRS was going to make the PTINs conditional on having the RTRP credentials, but now they’re not allowed to do that. It will go back to how it was last year, when you had to get a PTIN, but anyone could get one and you didn’t have to pass an exam or complete any continuing education.”
It is unclear how the IRS will deal with tax preparers who were scheduled to take the competency exam. “I don’t know how the IRS is going to wind things down,” said Alban. “As of the court’s ruling today, those regulations are null and void. Tax preparers don’t have to take that exam and they don’t have to comply with those regulations. The court ruled that these regulations did not have statutory authority.”
Judge Boasberg found that the text of the relevant statute does not support what the IRS claims as its authority to regulate tax preparers.
“Without deciding whether any of these three textual points alone would be dispositive, the Court concludes that together the statutory text and context unambiguously foreclose the IRS’s interpretation of 31 USC Section 330,” the judge wrote, adding, “The IRS also makes a number of nontextual arguments in favor of its interpretation, but none of these can overcome the statute’s unambiguous text here. In the land of statutory interpretation, statutory text is king.”
“They found that the IRS misinterpreted the statute and was basically trying to use it to expand its own authority in ways that the statute didn’t authorize,” said Alban. “On the first page of the opinion, they said that ‘the statute’s text and context unambiguously foreclose the IRS’s interpretation.’”
"With an invalid regulatory regime on the IRS's side of the scale and a threat to plaintiff's livelihood on the other, the balance of hardships tips strongly in favor of plaintiffs," Boasberg wrote later in the ruling.
There was no trial in the case because there were no disputed facts, Alban noted. The ruling came after cross-motions for summary judgment. The lawsuit was originally announced in March (see Tax Preparers Sue IRS over New Requirements). The Institute for Justice filed a motion for summary judgment in September, and the IRS filed a cross-motion for summary judgment in October. “We trialed a couple of reply briefs, and that was it,” said Alban. “It was just in front of the court on the papers to rule on the case.”
The IRS had argued that the statute was unambiguous and could be read expansively to give the agency the authority that it claimed. “They also claimed that they had inherent authority as an agency to regulate anything related to what they do and the court rejected both of those arguments,” said Alban.
On the first page of the opinion, the court said, “Agency action, however, requires statutory authority. The IRS interpreted an 1884 statute as enabling these new regulations. That statute allows the IRS to regulate ‘representatives’ who ‘practice’ before it. Believing that tax-return preparers are not covered under the statute, and thus cannot be regulated, Plaintiffs—three independent tax-return preparers—brought this suit.”
“That was pretty much the basis of its decision,” Alban explained. “An agency can’t act without statutory authority, without Congress giving them authorization to do something.”
If the IRS appeals the ruling, which it is almost certain to do, Alban said the Institute would then argue the case in front of the D.C. Circuit court, and to higher courts if necessary. “If the IRS loses again in front of the D.C. Circuit, we’d be happy to argue it in front of the Supreme Court if they take the case. But all of that is speculative. I have no idea if the IRS is going to appeal the decision on this. We’ll certainly take it as far as it goes. We’re willing to represent the rights of independent tax preparers.”
156 Comments
I have no problem with taking the test or contiued eduction.
I do have a problem however with the notion that attorneys and accountants do not have to take the test.
If I have the take the test and continue education, then attorneys and accountants should do the same.
There are attorneys and lawyers out there that cannot tell the difference between and 1040EZ and a 1040.
Posted by: rUDYY1946 | March 15, 2013 5:13 PM
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My comments come from a different direction, as a retired IRS employee.
There were comments about aiming audits at suspicious returns, etc. Many do not realize how staffing at the IRS works. Management is about 10%, and many of those are failed and are "in storage" due to incompetentcy. When Congress tried to reform the IRS in 1998, there was a requirement that all management positions be opened, and all managers were required to apply for their jobs again. It was a farce! Almost all got their old jobs back, qualified or not.
Why do I bring this up? The IRS is seriously understaffed, and has about 5% of employees who could be brought out of storage and required to work again. This would likely lead to leaner but better management -- and more to do the jobs.
Focussing on returns which need audits would provide only a partial solution. Due to Congressional dictate, most audits now are "low income" audits, ie, Earned Income. There are still many claiming the family dog or a mysterious child in East Overshoe, while at the same time there are lots and lots of income of higher-income people who should be audited, but there is insufficient staff.
The license requirements were an attempt to deal with this with the resources available.
By the way, I remember when I worked for a manager who had a roommate who was not qualified to represent anybody, but did so with the protection of the manager. A group of employees attempted to blow the whistle on this, IRS management covered up for the manager (including moving her to another office) and retaliated against the employees. There is good reason why few IRS employees risk being whistleblowers!
Posted by: RO | February 10, 2013 9:30 PM
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Court Upholds Injunction; IRS Reopens PTIN System (JofA) - The U.S. District Court for the District of Columbia refused to stay its injunction and stated that "no tax-return preparer may be required to pay testing or continuing-education fees or to complete any testing or continuing education unless and until this injunction is stayed or vacated...
Posted by: Charly | February 5, 2013 7:42 PM
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Where does this leave the preparers that already took the RTRP test and CPE credits? What happens to the money we spent to do so?
Posted by: mstrelade | January 28, 2013 8:16 AM
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I have had a small business preparing tax returns for nearly 20 years. I have about 65 clients, and most are low-income. I was prepared to take a hit on my profit so that they would not have to pay someone else a much higher fee to get their taxes done. Many of them COME BACK AFTER they receive their refunds, TO PAY ME. I'm sure there are many like me out there. The IRS should take appropriate action to seek out the unscrupulous, rather than penalizing the just and upright preparers. Unfortunately, I already paid the fee to Prometrics for the Exam, but was scheduled for this coming June. I doubt I'll ever see that money COME BACK from the IRS!
Posted by: taxpro2 | January 24, 2013 9:23 PM
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The IRS can test everyone they want to and as often as they want. It's just not going to stop the people who want to file incorrect returns in order to get larger refunds. Over the 40 plus years I've been in the tax business I've seen many returns from other preparers that had just made up deductions on them. Many times the taxpayer was not even aware of this, since most of the time they don't even look at their returns. Now I've completed my CE and passed the RTRP test the first try. I think that this was a good idea if properly enforced. Just that it would take a lot more to clean up the industry. Many comments here have addressed the EIC. To me, thats were the real problem lies. I have so many taxpayers that either want to claim children that are not their dependents , or let someone else claim their childred. When I say NO, they usually get up and leave. They go somewhere else and don't give them the same information they've given me. There's always someone out there that will do their return the way hey want, correct or not. They the taxpayer tells someone that I couldn't get them the refurn they were suppose to get. I'm sure that many of the preparers reading this can relate. Until the IRS comes up with something to replace EIC, this is going to be a problem. As for my business, I'm going to screen them as much as possible.
Posted by: daughertytax | January 24, 2013 3:47 PM
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I agree with Nickie regarding her comments. Again, It should always be the "Will of The People" to desire taking CPE classes yearly, and it should never have been required by the IRS to enforce just because the IRS feels it has the power as a regulating agency to do so. We live a world that no one wants to take responsibility any longer and when the IRS was thrown out of court with this RTRP and now the PTIN requirement has been shut down at the IRS then this only proves how backwards and wrong the IRS has been all along and has not given a formal apology on national news/media or sent any tax professionals an apology letter for demanding this RTRP requirement. This is a perfect example of how we now live in an age when no one wants to admit to being at fault, especially a big agency like the IRS which proves poor leadership in the the tax industry on thier part. Let's just hope and pray we can move forward from this point on and no more time is wasted with the IRS trying to appeal what they did wrong to begin with, however, it's tax time again and I have faith in God the IRS is doing their best to focus on gearing up to being accepting tax returns next week. Enormous Encouragement is flowing to the IRS to do what they do best during tax season and many of us are depending on the IRS to start doing their job and stop it with the RTRP Non-Sense!
Posted by: johnnydoe | January 24, 2013 1:58 PM
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I am a CPA in Ohio.
This ruling should put Congress on notice that the authority to regulate tax preparers should be expressly given to the IRS.
Many tax preparers are honest, but there are some preparers who are scammers, particulary with respect to following the rules for the Earned Income Credit(EIC).
However, I think that the fee for the PTIN should be rescinded; I think that the IRS should be able to require a PTIN, but there should not be a fee to obtain a PTIN.
Posted by: bnhogan01 | January 24, 2013 1:30 PM
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I am so amazed with the responses. As I mentioned before, we as tax preparers should be willing to take CPE courses yearly to stay updated with the law changes as well as the current provisions. The testing of EA or RTRP should be volunteer to take among tax preparers but not mandated by IRS. A license CPA or EA also should not be outcast to not take CPE courses yearly; as mentioned by others, their profession is questioned with incorrect tax returns an unregistered tax preparer had to amend. The entire madness of this is concerning one's that prepare false or fake tax returns for taxpayers; which cannot be stop with becoming a license RTRP or EA. As of today, the IRS has license CPAs as well as EAs and their license does not prevent them from preparing incorrect tax returns.
So how becoming a license RTRP is going to stop preparing incorrect, false, or fake tax returns?? With the understanding, the one's that are not test takers will be out of business; unlikely, they are not the one preparing incorrect, false, or fake tax returns. Also the IRS has criminals in prison preparing fake tax returns; so would the criminals in prison become a license RTRP too? lol
The IRS need to understand that it is somethings they cannot stop but they can prevent those issues with more penalties, close businesses that are committing fraud actions through their auditing system, and mandate tax preparers to commit to CPE courses yearly.
Posted by: NICKIE | January 24, 2013 10:05 AM
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It does not matter how much or how many times the IRS attempts to appeal this ruling which is in favor of tax professionls nation-wide because it is immoral, unethical and violates human civil rights. The IRS took it upon themselves to act on its own free will to infringe the RTRP against the will of the people, in this case the tax professional regardless of how offensive and unfair this became for millions of tax professionls. It appears some nut case decided to implement putting this RTRP in place and it backfired on him/her because of thier selfish, self-centered and far left liberal motives and finally got caught red handed. Now tax professionals can relax and begin to feel relief that an agency which we all thought was supposed to be exercising due diligence causes that are in the best interest of the people, in this case the tax preparers and now that the PTIN has been shut down at the IRS, God only knows how much trouble those perpetrators at the IRS are in. God help those IRS agents and God forgive them for they know not what they do. America is not a socialist country yet thank God, and this is a perfect example of what happens when an agency as big as the IRS attempts enforcing and policing a socialist movement restriction against tax professionals who for the most part are only trying to make an honest living doing all the steps to become certified tax professionals with both the federal and state agencies. Anyone who has common sense and good morals knows that it's enough for everything these poor tax professionls have to go through getting certified then all of a sudden the IRS wants to be in total control and doesn't think for 1 minute that it is wrong, unlawful and unjustifiable for the IRS to regulate such a restriction which not only hurts tax professionls, but also small businesses and what this great country, USA, was founded on which is "Capitalism" and the Free Enterprise System. This matter is definately a case of "If God is for you, who can be against you". God has answered millions of tax professionals prayers. Now it's time for "Forgiveness" to kick in. I forgive the IRS for breaking the law with this RTRP Scam and I pray the tax professionals as well as others will forgive the IRS, and that the IRS will come to terms with the U.S. District Court decision and ask for forgiveness then hopefully this RTRP Scam will be forgotten.
Posted by: johnnydoe | January 24, 2013 4:12 AM
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l thank lrs is right as agency to enforce the regulation of tax preparation procedure.An agency may not have authority to take the law on the matter but can prepare internal regulations for the functionning of the system. For example,a business is regulated by the law of business but the law doen't provide the internal details to enable the right function of the business system, this is the internal administration of the business that must create the internal administrative procedures to rule the business. lRS is the agency responsible for the management of the tax in the country. That authority was given by the Federal government and the congress. It is the one that knows by experience whether the system functions well or bad. In case of malfuction of the system, it is the one to take measures to address the problems and to take the right direction in order to make things going well for the satisfaction of its administration, of the federal government and of the country. Seen so many incompetency and fraud in the side of the most of preparers who are not attorneys, enrolled agents and CPAs, it wants to raise the level of tax preparers by requiring a RTRP exams believing that the big average of lost and frauds are the result of incompetency and lack of ethics and knowledge rules. By inforcing that internal regulations, the tax preparer will be seen as a true professionnal not like a thief,fraudulent and imoral without ethic. It is hard to see when one makes all efforts to comply with the rules and regulations in the tax preparation cannot make big monney because of the respect of moral, ethics and good business practice and another one who chooses the unfair practice as the rule is enriched in a short time without any sanction in the tax preparation business. IRs is the agent to regulate the tax laws. The congress that edicted the bills of law cannot be the one to enforce it, nor the Court until a case is brought to it attention. It must be an institution or an Agency to prepare internal Rules and regulations that must be followed by the tax return prepares in order to harmony the stability of the institution. The Federal Government and the Congress must edict a law that give power to IRs to regulate the competency of the actors who involve in the tax preparation. So l urge IRs to appel that decision and Urge the Congress to quickly take regulations to enforce the IRS empowement to continue the good job it is doing since years ago.
Posted by: nowin2win | January 23, 2013 7:40 PM
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I worked for Block for 20 years, and now run a small business out of my home. I was a bit peeved at the original requirements for CE credits amd testing, but over time I've come to accept it and think it's a good idea. I do believe that CPAs and attorneys need to take the test too, as many of the returns I've amended were done wrong by these professionals. If the IRS scraps the RTRP test as a requirement, I'd like to see them continue to offer it as an option. I believe it might strengthen my resume and give my clients a little more peace of mind.
Posted by: Dieseldave1951 | January 23, 2013 12:36 PM
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After reading some of these comments I'm convinced after noticing most seem to agree tax professionals need to be tested, however, if those who are not happy with this ruling then they should start reaching out to the tax professionals providing the support systems to help tax professionals struggling with every aspect of filing a tax return instead of critisizing and being hypocritical of tax professinals who are passsionate about preparing taxes, and find ways to prevent the IRS from mandating and enforcing the RTRP against the will of any tax professional, however, tax professionals should be encouraged to take the EA Exam, not be forced by governmnent to spend money, time and energy trying to pass the RTRP, and some tax professionals are not good test takers to begin with. Bottome line, is the IRS needs to be regulated far more than tax professionals do because most tax preparers are not intentionally trying to commit preparing fraudulent returns, they just want to have a job in the tax industry, keep up with the new tax laws which change yearly and want to have some fun doing it. The IRS appears to be too stuffy and needs to be careful not to enforce laws that violate our civil rights, and this RTRP scam is a perfect example of a lesson to be learned by all of us. I feel justice has been done when the judge through the IRS out of court and the IRS should be ashamed of themselves for going about the way they did with the RTRP process. History teaches us that big government exist to serve the people as servants, and the IRS has forgotten how to do their jobs by choosing to the path of dictatorship which always leads to destruction. The U.S. has a Constitution which is designed to protect us and all of us, including the IRS must abide by the constitution to prevent this kind of situation from occuring. Anything that puts a bad taste in our mouths is never a good thing to swollow or digest, and the RTRP is obviously one of these things. Now, maybe things will get back to being normal again without all the lunacy, greed and lawlessness which the IRS has proved to be at this point. We must also remind ourselves that The U.S. is not a nation built on Socialism, yet the IRS has failed miserably trying to force every tax preparer against thier will to be all the same and any socialist movement always fails which history has proven over and over again.
Posted by: johnnydoe | January 23, 2013 11:45 AM
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I have prepared tax returns now for over 10 years and have worked at Jackson Hewitt Tax service and taken their courses. I see no reason that the IRS has to test preparers, I am very happy with this ruling. However I am definetely for the idea of having preparers get yearly CPE credits, that way we brush up on new tax laws as they come out. And those courses you can take online at your convenience. The IRS testing is done at a testing site and costs a lot of money with no guarantee you can pass. Most preparers are up to date and are honest and sincere by following IRS rules and advising their clients to be compliant and pay all necessary and required taxes. You do not need to prove to anyone that you as a preparer are responsible person. I hope and pray that the IRS does not decide to appeal this decision and leave things they way they were before.
Posted by: scblake8543 | January 23, 2013 11:42 AM
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I am one of the dedicated accountant/tax preparers that voluntarily participated in continuing education long before IRS dictated that I had to. I specialize in corporate tax and accounting, so having to take a 1040 test, for me, was a waste of money (I only do a few for the owners of my businesses and I know how to do research if I don't know an answer). I understand that there are a lot of unscrupulous "1040 mills" out there, but to be honest, I have seen and fixed more CPA prepared returns that were flat out wrong than I can count. The RTRP program may weed out a few prepareres that don't want to bother with the costs or the regulations, but I don't see it as a fix for the incorrect return filings. Either you practice what you know or you don't - passing a test is not going to prevent someone from just sticking numbers on a return without some type of verification (like the CPA's I've seen!)
Posted by: dchapman10 | January 23, 2013 10:53 AM
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The way I see it. It was all about money. They place a price on the PTIN; which is understandable but to mandate CE as well as the RTRP, WOW. Moreover, for the RTRP, ones' would had to go to a service location to take the test. If one failed the test, one had to pay again and again until pass. IRS does not understand that most people are not test takers. Furthermore, if the test is an open book (PUB 17), why not take the test online from home/office?? The service locations was a waste of tax money because they had to pay for the location as well as a person to administer the test at the center. Also any testing or license does not prevent one from committing fraud on an individual/business tax return. It does not matter whether one is an Enrolled Agent, CPA, tax preparer, or whatever title; does not prevent one's from maximuming out one's tax return.
The economy is about politics and people is going to do whatever to maintain profit in this market. I have heard taxpayers that went to IRS local offices and complaint on tax preparers' that work for big chains as well as state officials that prepared taxes, and these taxpayers have to pay a large sum of money back to the IRS because they had trusted the big chains of training their people as well as state officials with their taxes.
I believe that CE should not be omitted yearly, it should be mandated yearly for tax preparers to their continue education as well as learn the new changes and laws. But to mandate RTRP, no should thing should be done.
Posted by: NICKIE | January 23, 2013 9:12 AM
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In their own words the IRS said the "vast majority of tax preparers were highly professional and committed to doing a good job..." So to believe this is about integrity, professionalism, quality, ethics(politicians are worried about OUR ethics), protecting the public etc. is delusional at best. You think too highly of yourselves. This is about control. Did any of you watch some of the Coronation the other day? Talk of giving up freedoms, talk of equal opportunities aka results, collectivism, an even larger fair share of taxes from the successful and a larger fair share to the deserving. My God! What the hell is wrong with some of you? Where do you think this is going? Do they still teach History? Did you study it? Did you learn anything? When men have seen the opportunity to seize absolute power, they did. Wouldn't you? I'm sure "it couldn't happen here".
Posted by: hisexcellency | January 23, 2013 9:10 AM
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This whole matter is out of control! I'd rather take the time and put my energy studying for the 3 Part EA Exam than to continue to be victimized by this horrific RTRP Exam which the IRS knowingly and tyrantly enforced against our will which I took very personal and felt that my Civil Rights have been violated. The IRS appears to be taking on this "Dictatorship" role and I don't like the smell of it. This RTRP has put a bad taste in most tax professionals mouths and this is unacceptable enforcing us tax professionals to sit in on a $100 plus exam which has to be paid each time you take it, and even if you pass it, you still have to pay the IRS for taking the RTRP with hopes your employer will reimburse you for each time you've taken it. There are 2 kinds of people in this world: People who want you to succeed and people who don't want you to succeed. I am of those people who wants everyone to succeed in life doing whatever they are passionate about, however, if a tax professional turns out to be a crooked tax preparer then he/she will get caught and imprisioned, but to treat all tax professionals who are excited about joining the tax industry as if they have done something wrong and to give them that impression is shameful, and that is what the IRS agency has done. I am very happy with this ruling and I hope and pray to God that it stands as is because God has obviously answered the tax professionals prayers who have been wasting time, energy and money trying to comply with this scam that the IRS has decietfully enforeced without this matter even passing in Congress. I thank God for whoever was involved in bringing the IRS to it's knees and throwing them out of the court room because now the IRS must know how the tax professionals have been feeling. In God We Trust!
Posted by: johnnydoe | January 23, 2013 3:40 AM
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As a CPA license in WA state, I am truly disappointed in this ruling. When I first heard about all this I thought, finally, there will be some oversight as to who has the right and ability to prepare tax returns for others. People who prepare and sign tax returns should have to show they are competent to do so and to comply with reasonable requirements to so prove.
Posted by: pollywog | January 22, 2013 5:26 PM
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As a professional, I like the designation "Registered Tax Return Preparer". I've been doing taxes for 31 years. I think the designation should stand and be voluntary. Anyone who chooses to go to an unqualified preparer--beware. This is just one way that taxpayers can assess someone's qualifications. I'll bet H&R Block is relieved!
Posted by: dbaeder | January 22, 2013 4:26 PM
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What a relief. This made my day.
I've been preparing tax returns as a side business for years. I didn't think I was going to be able to do it anymore since I can't afford the fees associated with the new requirements. I would have no profit left, super small business.
I mean really if the IRS is having problems with individual preparers then fine those individuals instead of making all us small businesses pay for exams and CPE.
Also if we needed to get a certification each year and the test was free that would be fine (like VITA).
Posted by: kannecat | January 22, 2013 4:14 PM
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Whether the Federal Government or the State regulates the industry doesn't matter to me as long as the industry is regulated. The standards imposed by the IRS were no big deal and I hope another court will oveturn the decision. If anyone attended the IRS Forums in the past would tell you if anything they were enriched by the educational and informational services provided to all Tax Practioners in attendance. There needs to be a governing agency to curb the fraud and misrepresentations of unqualified Tax Practioners or at least a body that educates them. I do agree with a previous post about education. Requirements for higher education should be a prerequisite. All Tax Practitioners should have a college level education with a background or major in accounting.
Posted by: jalfredojimenez2 | January 22, 2013 3:38 PM
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I have taken my CE credits last year and feel confident about passing the exam later this year.
I think that the IRS should have been requiring CE the entire time they have been in service. Can you think of any other profession that does not require CE? A doctor, lawyer, dentist...ect all require CE.
The test, I feel should be mandated to all brand new tax preparers that have not obtained a degree in accounting where you have taken SEVERAL tax classes. Including but not limited to fed taxation, corporate taxation, payroll accounting.. the list goes on and on. However, if your fresh out of high scholl or just decide one day out of the blue that you are going to start preparing tax returns for a living, I would think you would need to prove compentency to the IRS. Like applying for a job any where else. I don't feel insulted by the ruling at all and think that if the IRS was basing these rules on the law based in 1884, then the IRS did not complete the due diligence requirement that they would nail a tax preparer to the wall for..
I think the IRS should have to follow their own due diligence requirements.
Posted by: mlbray | January 22, 2013 3:07 PM
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I thought it was a good idea for everyone to have creditionals to file a tax return for someone else. If you can't pass THAT test you have no business doing someone elses return. The continued education is important for everyone. Things change and it helps to get some fresh facts. I hope the IRS appeals and makes this testing and continued education stick. If you know what you are doing and are confident with your work you shouldn't be afraid of the test. I have been doing taxes for 21 years and took the test and alot of it was common knowledge of things I already work with. Everyone needs to review the ethics. IRS is going to hold us as taxpreparers responsible for alot of things and you need to know what they are.
Posted by: Groff | January 22, 2013 2:21 PM
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I've prepared taxes with VITA, as a unregistered preparer for fees, and now as an RTRP independent contractor. I've seen enough bad and fraudulent returns that leads me to support certification. We need to clean the industry of unsavory preparers by making them accountable through certification! Tough if the test is hard ... study up like the rest of us and follow Cir 230.
JFK
Posted by: jkorejwa | January 22, 2013 1:52 PM
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When this scheme was first introduced, I dutifully paid the $64.28 (or whatever it was) for the initial PTIN (even though I already had one). I was so incensed by these potential restrictions on my very small business that I searched the web for like-minded folks. There I found the Institute For Justice and their lawsuit on behalf of three (really, 300,000) of us preparers. I decided not to worry or bother with additional PTIN fees, tests or continuing education. In fact, I donated my current PTIN fee to IJ instead of the Treasury.
If we small-fry stick together, in mass protest, there is no way the guvment can overcome us. Be bold. Never give up. And check out what other kinds of cases the non-profit Institute is litigating on behalf of regular people. Especially look at their Economic Liberty cases. Finally, consider contributing money to an organization that is really fighting against, successfully, our overbearing and business-killing government entities.
Posted by: taxshack | January 22, 2013 1:41 PM
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I accidentally pushed the comment button before completing my comments: I would like to add that the rules and regulations IRS put in effect in the first place were certainly unfair to "regular accountants" who were doing a good job for their clients and IRS. I believe the court made a correct decision!
Posted by: Ann LaFoe | January 22, 2013 1:29 PM
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01/22/13
As I understand it before this ruling.........someone please point out where I am wrong.
To Become an EA(Enrolled Agent)
You need to work for the IRS for 5 years in a position(whatever that is) requiring the interpretation of the tax code. OR Be 18 years old and pass a background check the EA 3 part exam.
To Become an RTRP(Registered Tax Return Preparer)
You need to be 18 years old and pass a background check the RTRP exam(open book with 1040 instructions and Pub 17 which is not considered authoritative for "substantial authority" purposes even though it is published by the IRS)
So it appears that you could be a high school dropout and still become an EA or RTRP.
How does that make sense for people who have gone to college and obtained a bachelors degree with an accounting major(with at least 1 course in Federal Taxation)? Even more interesting is that a PHD teaching taxation(to CPA's and Attorneys) at Harvard would not qualify to have prepared and signed a 1040 tax return as a paid preparer.
Posted by: beancounter54303 | January 22, 2013 12:37 PM
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As a CPA for 30 years, I have no problem with tax preparers being regulated. However, that should be a state issue. We already have a bloated federal govenment. The Service should delegate the preparer oversight to the States. Another federal duty costs more money which raises taxes. We already are "unpaid" agents of the IRS, with all the disclosure regs and associated penalties. As a tax accountant, I am no longer allowed to use my skill to take aggressive LEGAL positions to reduce the taxes of my clients. Now when the Service sees a position they don't like, they audit the client. Naturally any audit is good for my fees, but it subjects the client to more expense. I have a near a 100% success rate defending the positions taken, so for my clients it is a waste of money. Any restriction placed on the Service's regulations has my vote. I did not get into the accounting profession to be an ("unpaid") instructor of the Service. If a client is audited, the auditor should know the rules (wee have to) and not be given a road map. I applaud the decision of the Court. We need to reduce the size of the federal goverment and allow the Sates to regulate it's professionals.
Posted by: tcr.cpa | January 22, 2013 11:22 AM
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After preparing taxes for the last 12 years, I agree with the IRS that this industry should be regulated. I have not yet taken the test but intend to this year if it is still available. California has required certification and continuing education every year.
Posted by: sceotfree | January 22, 2013 11:10 AM
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Some of the comments here from folks supportting the IRS position are mind-boggling. Did you people bother to read the case? Did you look at what the IRS argued as their position?
The IRS cited law from 1884 & then "interpreted" it for themselves as granting "inherant authority" to fully regulate anything & everything related to whatever they do.
A law from 1884? Really? Do any of you remember the IRS wasn't even formed until 1913?
Are you honestly comfortable the IRS is "inherantly granted authority" to fully regulate anything & everything even vaguely related to what they do? Then just who decides what they can do & what they can't do?
And how about this? Is it OK for the FBI, the CIA & Homeland Security to take the same position? Does this 1884 law also "grant inherant authority" for those agencies to fully regulate anything & everything related to what they do?
Yes, the IRS needs to work on eliminating criminal & fraudulent preparers. But their RTRP program was like so many they've forced down our throats over the years.
It dumped more regulations & buracracy on all good preparers instead of establishing a system to identify & eliminate bad ones.
After 37 years of preparing taxes as my livelihood, without any audit problems, I'd gladly support an IRS program that got rid of the chaff without destroying the wheat.
So I feel the Court made absolutely the correct decision. Now I hope the IRS goes back & developes a monitoring system to indentify & eliminate bad preparers & leaves all of us good ones to our honest livelihoods.
Posted by: Unknown | January 22, 2013 10:59 AM
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What has happened is unfortunate & the verdict is immoral & unethical continuing to be perpetrated on the US Tax Payer. Let me explain: No Nation I know of allows its Citizens most personal information to be 'abused' by persons of other nations to be permitted to do US Tax Returns. This has many effects and all bad. That will continue unabated due to the verdict from this US District Court Judge. How sad! It in turn exposes the US Tax Payer to more ills & perils. I cannot think of any other conscious nation that would permit this unregulated environment to continue unabated!
The IRS & The US Government needs to fight this immoral & unethical verdict for the sake of its tax payers. There is a Fiduiciary Responsibility by the US Authorities to ensure Regulation of the unregistered Tax Preparer. This is not a game of some unregulated tax preparers due to money power & clout to try to flex & exercise muscle against the IRS. I as a Practising CPA am troubled by this outcome for the sake of the Innocent Tax Payer who goes to touts due to low balling of fees and no ethical regulations to prevent such a preparer from misusing the peeoles' info and from 'fly by night operators' from any where in the world too!
PLEASE ACCOUNTING TODAY & AICPA use your Influence with the US Government & the IRS to seek to reverse this ghastly ruling!
Posted by: KPGEORGE | January 22, 2013 10:49 AM
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The answer is for the unlicensed tax return preparers to band together and regulate themselves. If they fail to regulate themselves they will be brought under circular 230 or some other form of government regulation.
Posted by: rwdewey | January 22, 2013 9:09 AM
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It would be more useful to have the folks at the IRS who answer the phones and give tax advice to pass this test, because all the evidence indicates that they couldn't.
Government is good at holding citizens to standards from which it exempts itself.
Posted by: JoeThePimpernel | January 22, 2013 8:28 AM
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I firmly believe all preparers, whether a CPA, EA or ATTY should be held to the same standards if they receive compensation for preparing a tax return. Every person with a PTIN should fall under Circular 230 and should be required to have a certain number of CPE hours. This will not stop those who just do not know what they are doing but it will level the playing field for those of us who are licensed. I am sorry the IRS lost this battle. I hope the AICPA and NAEA keep fighting for a Congressional change.
Posted by: hlmtax | January 22, 2013 7:50 AM
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It is quite refreshing frankly, to see an attempt by our government to regulate anything, beat back. While there are and will continue to be a large number of incompetent tax preparers serving the public, the program offered up by the IRS was inadequate. Taking a simple test and then being able to advertise you are licensed by the IRS would have given the public the false image of competence as compared to using a CPA or EA!
Posted by: RondoCPA | January 22, 2013 7:44 AM
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The pros and cons comments posted by licensed and unlicensed tax preparers have been staggering to me. I am a CPA and adhere strictly to the prescribed rules and regulations by the State. I do not want my license to be revoked for preparing fraudulent tax returns, or suspended for failure to acquire 40 hours of continuing professional education. Taxpayers who are not satisfied with the work of a CPA can report the irregularities to IRS or to the CPA board of examiner for disciplinary action.
It is sad that unlicensed tax preparers prefer to have no regulator over them. I understand they know how to prepare tax return but their credibility is being eroded by not complying with the new IRS regulations. Every one is clamoring for a change in tax code.
rumar
Posted by: Unknown | January 21, 2013 10:36 PM
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The CPAs , the EA and the attorneys tried to put out of business those small tax professionals thru IRS regulations. They tried, but they did not succeeded. They feel that the money they make every year is not enought.
Posted by: geomar | January 21, 2013 7:29 PM
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I agree in part with "chrisfilby" that more than likely the IRS will seek a legislative solution through Congress. If the IRS had been paying attention to the State of Oregon Board of Tax Practitioners 40-year successful history, and modeled their statute and regulations accordingly, they wouldn't have to start over, as they will be required to do now. A delegation of Oregon tax practitioners met with the IRS in Washington, DC back in the early 1970's to discuss a "national licensing" law to be modeled after the Oregon licensing law but nothing came of it then. When drafting the subject regulations, the IRS did look at the current Oregon law but unwisely chose not to follow in its format. The first lesson was statute first, then regulation. Basic stuff but bureaucrats typically learn the hard way, and we the public suffer the results. Demonstration of proficiency through continuing education and testing in professional income tax return preparation is an absolute necessity. Otherwise, what you more than likely will get is a faulty product. I know of few professions that do not require some reasonable proficiency standard be it landscaping, construction, legal, accounting, or water technician. I find particularly ludicrous is Judge Boasberg's finding that the Plantiffs satisfied the four-factor test for a permanent injunction: (1) "irreparable injury" - Kilian and Gambiano unsubstantiated claim that "they will likely close their businesses if forced to comply." Elmer Kilian paints a picture of the typical unlicensed, low-fee tax income return preparer who works in his pajamas from the kitchen table "in his house." IF there is a copy of the IRC let alone Regulations in his "office," it's more than likely either outdated or covered with a film of dust. Quite possibly the extent of "research" material is IRS Pub 17. The rule is: whatever is "free." This kind of incompetent "tax preparer" is a source of the problems with the "self-assessed" US tax system. They do it cheap, and they get you a BIG refund (for now.) In the words of Judge Boasberg, "for some lucky taxpayers" there is the IRS audit. That's when the "come to Jesus moment" arrives. That "cheap" tax return is no longer cheap in many ways. It costs a bunch to defend the audit, and the BIG refunds vanish since those deductions (standard daily lodging rates are one of my favorites...costs the poor taxpayer big time in interest and penalties...Vaseline required treatment) were not legitimate. On the other hand, sometimes it goes the other way, and the taxpayer finds that he's overpaid tax for many years but the statute of limitations has expired for refunds. That's statistically accurate for only 1-2% of population. The other 98-99% percent of us poor saps who "play by the rules" are financing those who want to gamble with the tax roulette, and their enablers (i.e., kitchen table preparers). Judge Boasberg characterizes the 15-hour annual continuing education requirement as "hefty." Are you kidding me? Oregon law requires a minimum of 30 annual hours of tax related education to renew a license under the Board of Tax Practitioners, and that's still insufficient if you want to be competent in anything but individual income tax law. Regulation hasn't gone far enough yet, even in Oregon. Anyone can prepare a partnership/LLC income tax return for compensation yet those can be some of the most complex tax returns there are. We see it all the time. As far as the other 3 tests, I could go on and on and on, but he must have been smoking some mind altering remedial substance to arrive at the conclusion that the defendants would suffer "hardships" or that "the public interest would be served." The bottom line for the defendants in this case is (in the words of one of our US Presidents): "If you can't stand the heat, get out of the kitchen."
Posted by: ibcountn | January 21, 2013 7:26 PM
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Why does everybody assume the tax preparers who were a party to the suit either could not or would not pass the IRS test and are therefore incompetent? Hasn't anybody heard of sticking up for a moral or ethical position? Anybody ever heard of innocent until proven guilty? Well, the commenters here have acted as judge, jury, and prosecution, and pronounced these preparers as guilty! You should be ashamed of jumping to these conclusions!
As to the commenters who said these RTRP regs wouldn't drive anybody out of business except the incompetent preparers - you obviously work in a 1-man office and have NO CLUE about other types of offices. I have 7 part-time preparers - and have to pay for their PTIN's and their CE's each year. Talk about an expense! These are not people whose livlihood is preparing taxes, like mine is. These are intelligent, caring, knowledgeable people who make a little extra money during tax season. They have been doing it for years, and some of them have more years of experience than I do. BUT - they will not pay for these requirements themselves, because it doesn't matter to them if they are forced to find some other way to make their extra cash. They look at the new requirements not as needs to keep up a professional certification, but as having to pay IRS for the privilege of having a job - and many won't do it. Instead, my poor small business must absorb the additional costs for ALL my preparers - and the industry for "retail tax preparation" has been marginalized by IRS increasingly over the years. So, at the time when I am making less money than I ever did, I am having to absorb more expenses than I ever did - thanks to the IRS. You may not have any issue with the RTRP scheme, but don't badmouth those who do - or those who decide to take a moral stand the you choose not to.
Posted by: olivertax | January 21, 2013 7:23 PM
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Wow...I may be too late to enter my thoughts!
I too have mixed emotions the more or less Libeterian side of me thinks that if you want your plumber or trash hauler to do your tax return GO Gor It!
The more practical side says yes we need some kind of regulations out there....I likie other have seen some awful work out there.
I am a newbie in the business. I have been responsible for the preparation of something in excess of 243,000 Federal and State Tax Returns.
I am entering my [49th] forty ninth filing season, I have worked for the big retail firm....I was on a first name basis with Henry and Richard...I was an enrolled agent for many years.... colorectal cancer slowed me down a litte [17] seventeen years ago, a binign brain tumor [8] eight years ago caused me to miss some Continued Education and I lost my EA designation.
Now I am dealing with Macular Degeneration particularly in the right eye...
If I sound like I am complaining or braging I plead not guilty on both counts...I feel good almost everyday.
I like the work, I like the people, I like the gal that I work with and have been married to almost [53] fifty three years.
I dislike dealing with the IRS in the manner required today... a few years ago we dealt with real people that had real families and real lives. Over time I have probably dealt with over fifty IRS personel including Revenue Agents and Revenue Officers in Joplin, Springfield, Kansas city....
Today all too many of the IRS people need more training...they might know the book but not the application of the letter.
I am just smart enough to know that I am slipping just a little bit....I do have a Four Year Accounting Degree...when I worked for those big folks I taught their courses....very enjoyable, very!
Over the years I had probably a couple hundred people attend those classes and put [50] fifty some odd people in the business to compete with me...that is just part of the whole scheme of things.
Summary: Mixed emotions. There needs to be more order in our business....but I am sure that had I been able to be unbiased [I'm not] that I would have agreed with the Judge's Ruling.
If I have not offended someone by now....I will these regulations fall right in line with the thousands of regulations that this Administration is foisting upon small business that we deal with and on us. SCARY!
Posted by: deanwinfiel | January 21, 2013 6:42 PM
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IRS should provide free online test. CE requirements is helpful. Small tax preparer dealing with only W-2s income and EIC credit does not have to be CPA or EA.
Posted by: rajendra | January 21, 2013 6:42 PM
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The IRS requirements even applied to PAYROLL PREPARERS. Perhaps this relaxation will help to make payroll preparation costs more reasonable.
Posted by: BrainerdCMA | January 21, 2013 5:59 PM
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I have been preparing income taxes for the public professionally for over 45 years. I tested, passed and completed my continuing education for tax year 2012. I am disappointed in the court ruling. I do understand that the IRS does not have the authority to regulate the tax preparer. I do understand that there are many individuals who prepare taxes using a program that is sold at most office supply stores and big box stores, leaving the (self-prepared)statement on the return and getting paid for the service. This is one of the areas that needs cleaned up. These are people who see a fast buck and want to cash in leaving the education up to the program to determine right from wrong for the taxpayer. I believe the IRS is wanting to clean it up as they are too often correcting returns, losing funds to operate because of these seasonal entities. As one gentlemen put it "The IRS needs to do it the right way."
Posted by: jmarkusic | January 21, 2013 5:43 PM
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I'm not sure what this exam would prove anyway when I have a certificate in federal taxation from an accredited college where I maintained a 4.0 grade point average. I spent all that time and money and now the IRS says that is worthles unless I take this test. I put the time and money into proving I had the aptitude to prepare a tax return. Government agencies in general are expanding their scope way beyond their initial mandate and that is a big problem with our way of life right now. More common sense needs to be put into the framing of laws and regulations.
Posted by: treppel | January 21, 2013 4:50 PM
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I too am torn with this court decision. After 35 years of doing taxes I am insulted that the IRS can say I have to test in order to continue doing what I have been doing very well all these years but someone with an EA or CPA or ATTY behind there name doesn't have to test. I have corrected poorly filed returns prepared by some of these individuals so many times over the years it is wrong to leave out anyone. If you want competent individuals filing returns then test everyone who files returns. Around 1995 I was president of the Alaska Society of Public Accountants. We tried to get a bill passed to set up a Licensed Public Accountant to allow those non-CPA's to be tested and licensed as qualified to do Accounting and Tax Returns. This would give the public the ability to pick an accountant that had at least passed a certain level of competency. The CPA Society raised a large amount of money to send their lobbyists to the State Legislators and when we testified at the committee hearings we could see they had already been in meetings with there lobbyists and had already made up their minds. The bill never made it out of committee.
The CPA's don't want to insure that the public gets qualified tax preparers, they just want to get rid of the competition and they have enlisted the government to do it for them.
The IRS has no right to license tax preparers. It does have the right to punish them if they are incompetent or fraudulent in preparing returns for the public. For those who have taken the exam and qualified for their RTRP Certification, if the program continues under a voluntary system, then they have shown themselves to be at a certain standard of excellence.
Posted by: David H | January 21, 2013 4:41 PM
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It's a pretty simple concept: Make sure that those who are preparing tax returns for others for compensation know what they are doing. They need to know the law, the detail preparation instructions, what to do and why. The IRS should logically be the agency to govern those preparers. The RTRP law is not perfect, I agree that EAs, CPAs, and lawyers should also be held to a level of competency. That means testing in addition to CE. I know of too many preparers who don't know what they are doing, and that hurts the professionals that do. It dilutes our reputation and client base so that (at times) the lowest fees determine who gets the business. If anyone can, than anyone will. I don't have a huge client base - only 30-35 per year, which I happily prepare each year for friends and family. I love to helps so that they don;t have to pay the big guys' prices. The cost of CE, PTIN, preparing for the test and the testing itself was a burden and I didn't like it, but it's better than the (old) alternative. I hope IRS wins the appeal, as our clients win if they do so.
Posted by: wscuburch | January 21, 2013 4:13 PM
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I have my bachelors degree in business administration and accounting and I don't believe that if people already have some kind of credentials on accounting and tax preparation should take the exam. I do agree theirs a lot of false preparers, just wanted to take advantage of people. I do believe that having a PTIN and being registered is a good form for the IRS to know who are you and if you are breaking any laws. I I have had my PTIN since I started and I am a registered tax prepared. I am schedule to take the test on the 29 of January and do not mind taking it. i will just acquired more knowledge.
Posted by: Imelda C | January 21, 2013 4:08 PM
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The IRS governs tax preparers to help protect consumers, and I think there are a lot of bad preparers who are too lazy to stay on top of tax laws. They are seasonal. As to the big tax chains fighting against Mom and Pop's tax offices, I think a huge problem is with the big tax chains themselves. They have seasonal employees, and there is a huge turnover in the tax preparation industry. But if you enter it, you cannot "play" at it. I don't know why they would stop testing requirements, but I do think the IRS should have the authority to regulate and require tax preparers be competent through annual training! Testing with a basic tax test is the right way to start seeing what even the most inexperienced preparer should know. What is wrong with that??? Requiring continuing education is the right thing to do! I'm a tax preparer and I don't object to the training or the fees. And it's not about the fee they charge as any specialized industry charges fees to maintain their certifications. What is wrong with that??? And to those who glorify themselves that they have lots of tax customers because they charge low fees, well, isn't everyone looking for the bargain? You may have lots of clients BECAUSE you have low fees, not because you know taxes. When someone comes to you, they already EXPECT you know taxes, no less. So they are primarily really looking for the bargain price but still want a competent preparer. That's no reason to think people flock to you for your expertise. Maybe it's the low price. Some will stick with someone no matter the price, but even those are still looking for best price. That's no recommendation of the tax preparer. We need to make ALL preparers more competent overall. I agree with one of the writers about attorneys. Attorneys specializing in tax laws i.e., tax attorney should be only ones exempt from testing. Other attorneys don't know anything about taxes. Lots of CPA's have secondary persons do tax returns for them with the idea those returns will be reviewed by the CPA. But do they really review each return? I'm doubtful. Some do, but CPAs may put themselves on the harder work and leave tax prep to their employees. ALL persons should be tested who are going to be preparers. What do attorneys or CPAs have to fear by just taking this basic test? That you aren't as good as what the IRS thought you were supposed to be, i.e., that you two groups should know taxes???
Posted by: oneilln | January 21, 2013 3:08 PM
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I am mixed on this issue, I don't mind the education , I have taken online classes every year since I started doing income tax work in 2001, my issue is that there are so many people who go online , do their taxes and all their friends and family's taxes for free,( they have no education) how is that fair to us? How are we supposed to make a living, when I am paying 600 a year for software, 300 for tax classes 65 for my PTIN, not to mention all the paper, ink and other office supplies, by the time I figure what I have to charge to earn anything, it's no wonder why people just do it on there own, but where does that leave us independents? This big test is a pain for me, I live in a rural area, they expect me to drive 3 hrs to a testing site, take 3 hr. exam then drive home again, or spend more money get a motel room. I have a handicapped daughter that can not be left alone, which is why I chose to work from home to start with , to find a competent person to stay with her while I do this trip isn't going to be easy nor cheap. Where do I get that money? charge even more for my service and lose even more client to the internet free file... the insult to me is that I not only have to pay all that cost then I have to pay to take their test, that is bull, I will take a test every yr if they want me to but the added cost isn't fair unless they are going to prevent people from using free file so we can make a living, as I said this is a rural area I don't have a lot of clients but most are loyal to me, I can't charge them like H&R or some of the other big firms do. I don't know about the rest of you but I had to take tax classes to learn how to prepare taxes before I got my PTIN ,which was free by the way, now I have to pay every year to keep it, more bull . I take classes every year on line for free, but now that too costs big money... more bull. It's all about the money, well I for one don't want to charge people more to make up for all this added cost, if the IRS wants me to do all this , I will comply but then someone better regulate the cost, because all this will do is put independents like me, out of business.
Posted by: debdufour | January 21, 2013 3:01 PM
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I passed the RTRP exam and completed the continuing education requirements for 2012. I agree with the IRS and feel that a standard must be set. I have always taken a great deal of time to stay current with the changes in the Internal Revenue Code and, have been preparing tax returns and advising clients for over 30 years. If a preparer is nothing more than a button pusher operating a software package, that preparer is doing a disservice to anyone for whom the preparer completes a tax return. In order to be a competent preparer, it is essential that the preparer understand the Internal Revenue Code and stay current with the ongoing changes. I do not feel that every CPA or Attorney is necessarily competent to prepare tax returns. I do feel that those involved in tax should also take the necessary steps to remain competent. Those preparers that have taken the RTRP exam and not passed it should take the time to study and reach the necessary level to pass the exam.
Posted by: Robert D | January 21, 2013 2:26 PM
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As a CPA, I'd like to caution those painting a large brush for "all CPAs" and their qualifications.
In order for me to become a licensed CPA in the state of NY, I had to work in public accounting preparing taxes OR accounting and auditing for two years. It did not have to be a large firm, but it did have to be under a licensed CPA. I was fortunate enough to get excellent training in taxes, accounting and auditing. All of which have served me well over the years.
I realize that each state has it's own set of rules when licensing a CPA. For instance, Texas doesn't require a mandatory period of public accounting.
Agreed, not all CPAs have as much tax background as I do and I have corrected tax returns prepared by those who are not qualified to prepare a tax return, CPA or otherwise.
In my opinion, computers have "dumbed down" anyone preparing taxes with just tax software. The real test to preparing a tax return is a paper one! There are "paid preparers" that use tax software and have very little knowledge of the actual tax laws. Yes, some of the tax code is open for interpretation, but not all. There are basic tax laws that should be abided by and they are not. I can tell you that "filing status" and "dependents" are at the top of the list.
The tax code is so complicated, no one can get it 100% right every time. A good tax preparer (CPA, EA, Attorney or otherwise) is one who knows the basic tax laws and then researches any issue that they are not completely familiar with prior to putting it on a tax return.
A smart person is one who is smart enough to know what they don't know and then learns it.
Posted by: Traveltax | January 21, 2013 1:02 PM
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I have to second the question about why do lawyers not have to take the test. I have lawyers send clients to me to do the taxes because they do not know enough about taxes. A Tax Attorney, sure. But a general practice lawyer? C'mon!
Posted by: slobadan1 | January 21, 2013 12:54 PM
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The IRS has had the authority for over a hundred years. They set the bar for attorneys, CPAs, and EAs. They have the authority to set it for RTRPs, as well. I sincerely hope the RTRP program will not go away, as they should be subject to the same requirements as other tax practitioners.
Posted by: Mitch2013 | January 21, 2013 12:51 PM
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Whoa everybody! You are all missing the point! No one, no one should have to pay to have their taxes done! When first began it was very simple to do your own taxes. You cannot compare tax preparation to other licensed professions. Most of us cannot do for ourselves what a professional can. But each of us should be able to do our own taxes. The Congress and the IRS are to blame for the mess we have called our Tax System. What if every tax preparer said "I am not doing anymore taxes!"? Would the IRS then regulate each and every taxpayer? No! They would either make our tax system simple or have to prepare all the returns themselves! A tax payer who can do his/her own taxes is not regulated. Why should a tax preparer be regulated? Also, who the hell regulates the IRS personnel!? I have been doing taxes for 24 years and guarantee I know more about the 1040 tax form than most IRS employees. Will the IRS employees who answer the phones and give consistently wrong answers be forced to take a competency test? I think what you have here is big tax chains and CPAs and Lawyers lobbying for this testing. They want the little guy out! I beat the hell out or my local chain tax prep businesses and CPAs. I charge &65.00 for a properly prepared 1040, not $350.00. Customers flock to me. Trust, ability, and reasonable cost is how to do it. I do not need IRS personnel (a.k.a. GOVERNMENT)on my back. I will let the free market determine how my business does. An it is fantastic, thank you.
Posted by: slobadan1 | January 21, 2013 12:49 PM
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I have been doing tax returns for over 40 years. I have been fortunate to have not had returns audited.
I am slowly gearing down to close my practice and have less than 100 tax clients. I am handicapped and have the office in my home. I was unable to find a testing sight that would allow me to park within 20 feet of the door and then allow me to plug my oxygen concentrator in so I could breathe while taking the test. I sent letters to all my current clients and advised that I would not be able to do their returns after the 2012 year, and all called and stated they would not go anywhere else unless I had closed my office permanently. So I have ordered my softwear before this ruling, and am very happy that us "little guys" are not being forced out of business.
Posted by: Nanci T. | January 21, 2013 12:21 PM
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Folks, I believe the entire point is completely missed. It is IRRELEVANT whether or not the industry is regulated. Look at Bernie Madoff as the prime example. The SEC, FINRA, and myriads of other regulatory agencies were 'overseeing' his operations and yet failed to root out a $50 billion ponzi scheme. MORE REGULATION IS NOT THE ANSWER. It is high time that an individuals experience, training, education, work history in the industry, and other factors be considered when attempting to apply the overreach of Circular 230 and prohibiting those of us with a passion for research from acting before the IRS due to not having one of their "recognized" designations. I am a Certified Tax Specialist, Certified Estate & Trust Specialist, and am 3 courses away from completing my Master of Science Degree in Finance from the Institute of Business & Finance, and yet without an EA, CPA, or law degree I am enjoined from representing a client at even the lowest levels of the IRS? This type of discriminiation is not only outrageous, but it is tantamount to class warfare. The bottom line is I do mainly TAX ADVISING TO BUSINESS OWNERS, who incidentally are also 1040 filers, and I can assure you after 23 years in the industry, I ACTUALLY DO know a fair amount more than most CPA's I encounter for precisely the reason indicated earlier...many are focused on auditing rather than advising. I typically do not prepare the returns, as I leave that for the CPA's I work closely with. There is a significant need for professionals like me because most CPA's are so busy preparing taxes by transitioning information from Quickbooks to ProSeries that they do not have TIME to engage in the PROACTIVE PLANNING that taxpayers need in order to stay on top of constantly changing regs. Folks, there is enough room at the trough for EVERYONE. Pigs get fat and hogs get slaughtered, remember? Rather than fight each other, we need to learn collaborative ways to lean on each other's strengths and shore up each others weaknesses. The IRS has far more power than it needs or is warranted. The RTRP measure was simply a way to use our time as their free asset, to be their first line of audit defense. EDUCATION AND STUDY ARE KEY, BUT IT MUST COME FROM DESIRE, NOT EXTERNAL CONSTRAINT AND FURTHER REGULATION. Just sayin'... :-))
Posted by: johnehill08 | January 21, 2013 12:20 PM
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I have prepared taxes for over 25 years and have corrected many returns prepared by CPA and Enrolled agent and gone to bat with the IRS for the client that they screwed up the return for. I have even worked for a few CPA's and Enrolled Agents in my time. One of whom when preparing an individuals personal return told me to up their mileage and contributions. They just didn't look like enough to him. Really, how is that client to justify these changes if the IRS Audited them. Respose "They will never catch it!" Why are they not tested? And attorneys preparing tax returns? I have been through a few divorce cases that the attorney made a decision on a QDRO but had no idea what it meant. Why are they not tested?
I believe that many of the tax return preparers out there are more conscientious about their clients returns and tend to spend more time asking them questions to indeed get them the correct refund or insure that the amount they owe is correct. Our clients are our bread and butter and we want them to come back year to year. Most of my clients have been with me for those 25 years because they trust me to look out for their best interest and I will tell them I do not know the answer but will find out for them. In my experience with working with some of those CPA's and Enrolled Agents, they are not even the ones doing the returns. They have some underling doing it and they just sign their name when it is done.
I also agree with a statement made by another individual above that when you call the IRS you can talk to 10 different people and get 10 different answers, or they have to send you to the department that handles that particular line on the tax return. If I do not know the answer to a specific question you can be guaranteed I am looking it up in my handy dandy reference material. Even the audits I have had have been rather interesting. The auditor has no idea how day to day business is run but is there to determine if a specific deduction is allowed or not. They need to be more educated.
My point is instead of testing us all look at our records. You have our PTIN. Check to see how many of the returns we have filed have been flaged for suspicious information, errors resulting in audits etc. You know the ones that are filing fraudulent returns, GO AFTER THEM.
Posted by: SharonaO1 | January 21, 2013 12:09 PM
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This ruling is detrimental to the general public. As an EA, I am required to have CPEs every year. As a tax professional, I recognize the importance of such.
Beauticians, librarians, doctors, nurses, nursing assistants, financial planners, and people in many other professions are required to have certain licensing, which includes testing and continuing education. Shouldn't a person performing tax preparation be subject to licensing including testing and continuing education as well? We who prepare tax returns are privy to all sorts of personal financial information. It only makes sense that we should be required by law to be licensed to do so.
Perhaps the IRS should not be the entity responsible for regulating licensing for tax professionals. But what would those opposed to this suggest? Would it be suggested that the government needs to introduce yet another agency that would be responsible for this testing? Perhaps having state-specific requirements, such as those in CA and OR would be best. I would suggest that people write to their governors if they feel this is the best idea.
In the meantime, I will continue to advocate for the licensing of all persons preparing tax returns, and I really couldn't care less what entity is doing that regulating.
Posted by: TaxProRei | January 21, 2013 12:01 PM
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Many great comments here. I have mixed emotions on the issue. I feel that it should be voluntary. Also, The testing should be more easily accessible. I do resent the costs involved for professionals when non professionals have easy access to tax filing software. Seems that everytime you turn around there is someone pushing FREE filing. That comes from some of our own software providers and the IRS. You're cutting our throats and now you want me, a 12 year professional to have the expenses to become registered and qualified. While allowing anyone with no experience at all to prepare taxes free online. All this while ghetto moms, prisoners, and others are jumping online and filing EIC returns for everyone in the neighborhood. They don't worry about filing States because they usually stay under the filing requirements. They do the taxes and get paid under the table so it doesn't effect their welfare benefits. Sounds to me like that is where the money is. Not by charging professionals that already sign and designate their work.
Posted by: wadgaf | January 21, 2013 11:59 AM
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As an Enrolled Agent, U.S. Treasury with a practice for over 40 years, I find the court's decision surprising and irresponsible. I believe it will be appealed and overturned. The Treasury Department regulates preparers under Circular 230, and 31 USC S330 allows the Treasury to regulate "practice before the Department" which includes "the qualifications and competency" of preparers. LOOK IT UP. Those of us in the business know the horror of some of the work of unskilled preparers and people who aren't willing to invest their minds into learning a working knowledge of the tax code . They shouldn't be able to charge for their services. This test is a minimum level skills test and if you don't know what you are doing you shouldn't be doing. John Masselli, Enrolled Agent
Posted by: Valdar | January 21, 2013 11:44 AM
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I have been a tax preparer for 15 years. I also worked for H & R Block and swore that when I got enough education through them that I would branch out on my own which I did 9 years ago. Having C.P.A. OR E.A. after my name was never important to me because I know my business of preparing taxes. I have resented the fact that I, being just a "tax preparer without initials" I had to take this test. But, the biggest thing I resented was the fact that the IRS was doing this for the benefit of all those tax preparers who were preparing taxes legitimately and to weed out those who weren't so they wouldn't take away clients for the rest of us. In other words, I always got the feeling that they were more worried about tax preparers instead of the public. If they would have said that it was to protect the public rather than protect the tax preparer I would have agreed 100% but, they didn't.
I have paid my dues, studied numerous hours for the test, drove 100 miles 1 way to the testing place, paid for the test and passed the test to comply with their rules. I'm one of those people that I know my business but, put me in front of a test that was mandatory to pass, I could have froze and failed it but, the test was easy. I went through it twice and still had 10 minutes to spare and I passed.
Now, today I read that they have ruled out the testing and I'd like to know who is going to pay me back for all my time, effort and funds that have come out of my pocket to pass this test? I don't charge my clients like H & R Block or C.P.A.'S because, in my opinion, they gouge their clients but, I am fair to myself and to my clients.
I think that the IRS needs to appeal this ruling but, in doing so, they need to stipulate that this is for the benefit of the tax "payer" and NOT for the tax "preparer". I would then understand why this requirement is necessary.
Oh...one more thing I'd like to mention.....while working for H & R Block, I was well aware of tax preparers that barely passed their final exam but, was hired anyway. I am also well aware of the fact that tax preparers have passed the EA exam after the first year of preparing taxes. I have worked with ex-IRS agents who automatically become EA's just for being employed by the IRS and they know no more than those at H & R Block who barely pass. I have been told that C.P.A.'s only have 6 - 6 1/2 hours of tax prep education to become a C.P.A. and I had 60 hours to become a tax preparer. So, I am saying that this rule should apply all who are required to have a PTIN MUST pass this same test if they want to prepare income taxes.
Posted by: taxesbycnde | January 21, 2013 11:40 AM
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I, personally, would have no objection to a continuing education requirement; in fact, with the number of tax law changes that Congress produces annually, a 20 hour CE requirement on changes in the current year's taxes doesn't seem out of line.
The test is another matter. As far as I can tell, most of the cost of the test is for (information) security at the test sites. The stated purpose of the test is to ensure competence and ethical behavior; it might ensure (minimal) competence, and possibly _knowledge_ of ethical behavior, but no simple test can ensure ethical behavior, and no one without a non-professional agenda can equate failure to E-file with unethical behavior.
I would urge Congress to pass a CE requirement, but any testing should be done under the auspices of the Ombudsman, rather than of the IRS. It would a bit hard on those preparers who have already passed the RTRP exam, but it seems more fair. It's clear that the states (Oregon and California, at least) CAN regulate tax preparers, so it's not really clear that Congress has the authority, even with carefully-writen legislation.
As to my credentials; I've been a California tax preparer for a number of years.
Posted by: A.Rubin | January 21, 2013 11:40 AM
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I am very disappointed in this ruling. As a tax preparer you are receiving highly confidential information from a client that in the wrong hands can do serious damage. If I hire someone to cut a tree down , install a roof or fix my plumbing they have to be licensed but handling personal financial information should not have any requirements? I am an EA with 35 years experience and an MBA. Obviously qualified to do tax preparation. So someone else with an 8th grade education and no experience should be allowed to prepare taxes with no accountability? Makes no sense!!!!
Posted by: 235court | January 21, 2013 11:39 AM
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The question is not if the IRS did or did not overstep their authority . The question is, why would anyone want a preparer who did not meet a minimal level of qualification? I for one hope this is sorted out and some level of testing is implemented. FYI, I took my test for RTRP in 2011 and it is not that hard.
Posted by: jvarnone | January 21, 2013 11:39 AM
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I have been doing taxes through IRS since Jan. 1998 and I am always mindful to stay abreast of all the new and continuing changes of the tax laws. I don't mind the requirements but what I do mind is all of the fees associated with taking the testing from so many offices that are trying to get rich off of the tax preparers. So, I am glad it is not a requirement to take the test but we should continue to be aware of the tax laws in order to prepare the best return for our clients. Even though I was not required to take the test, I have to get my PTIN and with my software, I am tested before I can receive my software.
Posted by: bloretta2 | January 21, 2013 11:38 AM
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I am a CPA and I have mixed feelings about this. I think the RTRP exam is too easy and the IRS didn't really regulate well. This could be the best thing that can happen, maybe Congress can pass a legislature to only allow CPAs to prepare tax returns. As for now, I can easily hire someone and not require my employees be licensed.
Posted by: Exceltax | January 21, 2013 11:26 AM
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I agree there should be control with the IRS BUT I do not agree with the recent ruling. Preparing taxes for others is a PROFESSION. The testing and continuing education requirements was a way for some who are not CPAs or Enrolled Agents to obtain some professional credientials. I took the examine and the CPE and note to anyone against these requirements - if you can't pass that test then you SHOULDN'T be allowed to prepare taxes for others OR for yourself. If you can't answer those basic questions then find another profession!!! The IRS is only trying to weed out the individuals who really don't know how to prepare tax returns!!!
Posted by: kscrogin | January 21, 2013 11:24 AM
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My issue is not with a test or CPE's but with the limitations that the RTPR designation places on a tax preparer. My issue is the fact that there seems to be nothing what-so-ever between being a CPA, EA or Attorney and RTPR. I have a 4 year college education, more that 27 years experience in tax preparation, years running a tax attorney's tax practice and none of that matters. The RTPR designation limits my ability to give advice beyond the current tax year among other things. To sit for the EA exam, you don't need any educational requirements at all. If you can pass the exam, you can hang up your shingle even if you've never done one tax return and as anyone who has ever done a return, theory is exponentionally different than practice.
This attempt by the IRS to regulate is not completely ridiculous, however any new attempts for testing, etc, need to take into consideration a tax preparer's experience, education in addition to passing an exam. Allowing credit for these things, or to tier the certification somehow.
I agree with another comment that was posted, regarding the first returns for me, prepared by CPA's with some pretty big mistakes on them. I prepared a first time return for a client that had been done for years by a CPA previously, who was taking 100% of day care and 100% home mortgage interest on a SCHEDULE C!!! A CPA designation does not ensure that they are any more equipped to prepare taxes, since in our State, the requirement for licensing is that you work 2080 hours for a CPA with the predominance of that time in auditing - NOT Tax Return Prep! Which is why, even though I sat for and passed the exam, I am not licensed.
This might have been a well intentioned attempt to regulate tax preparers, however it was inherently flawed in the way it just groups everyone all together in one basic catagory, with no regard to education or experience.
It's a flawed system when you can argue a point with the IRS, knowing you are right, have the tax code, the substantiation, etc and have to argue and argue and argue for over a year while the IRS takes refunds and imposes penalties and interest on the issue and then you finally go to the Taxpayers Advocate Service for help, and after a year of fighting they resolve it in your favor in 2 weeks. Now the TAS is being limited on the claims they can accept based on the dollar value. It's a flawed system when you can call the IRS on an issue 10 times and get 10 different answers. Maybe the IRS Employees should be required to take a test and get CPE's.
Posted by: taxingcheryl | January 21, 2013 11:20 AM
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How does this effect the E-file requirement of making mandatory to E-file if you prepare more than 10 returns? If anyone know please share with me. Thank you.
Posted by: CFONate | January 21, 2013 11:20 AM
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Hummm -- Seems like a lot of sour grapes! I have been papering taxes for over 40 years and professionally for the last 8 years (being paid for it). I agree that preparers should be QUALIFIED. But the IRS went about it the WRONG WAY! ALL tax law originates in the House of Representatives. We need it to start there! IRS - do your job! When you get a bunch of returns that are WRONG or seem bogus, Call the prepare on the carpet! You don't need to test them just STOP them! You have that power - why do you need more? I have take the 15 CEs and agree that it is a good idea! BUT Still have reservations about the testing... only 70% to pass? Does that mean that only 70% of the return I prepare has to be correct? Doesn't make much sense to me! HalF Prescott Valley Az
Posted by: HalF | January 21, 2013 11:15 AM
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I have very mixed feeling about all of this. I have been studying like crazy for the RTRP exam and gaining on CPE credits, especially the regulations etc., had the exam scheduled for next month. What happens to those of us that have put quite a bit of money into this preparation, I have and still am quite knowledgeable in the tax field. But I feel this as a big blow to those of us who have put forth the effort.
Posted by: BarbA | January 21, 2013 10:59 AM
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Briggsie, does a bank robber sign a withdrawal slip before they run out the door? How is the IRS supposed to find these unregistered tax preparers when, since they would be filing returns illegally, there is little to no chance that they are going to sign the return? All the returns they prepare will go to the IRS as 'self-prepared' (as in prepared by the taxpayer)returns. Dishonest tax preparers will be out there, testing or no testing, registration or no registration.
JAscher, The court's ruling is not an insult to tax preparers. The insult comes from the IRS. They overstepped their boundaries and expected us to suck it up, ask no questions and go along with their control issues. In other words, we were supposed to roll over and play dead and put up with their superior attitude. (Which *I* did, BTW)
I heard about this court case when it was filed and I thought there was no way three tax preparers could ever win against the IRS. I'm proud of them for having the guts to file the case and I'm proud of the judge for his ruling.
However, this issue is a long way from being over. The IRS probably has already been to Washington DC to plead for Congress to be on their side and fix their mess by giving them the authority they need to go forward with the testing and registration. If filing an appeal case to a higher court is the next step, you can bet it will happen. The IRS will not be the ones to roll over and play dead. So if you haven't taken the test and you are an honest tax preparer, you will, sooner or later.
Posted by: jay1 | January 21, 2013 10:58 AM
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All the licensing schemes in the world can't stop fraud when an individual may do their own taxes... Also, because someone obtains a license does not mean you know much about taxes, think good doctor vs poor doctor. The important part here is the fact that a governmental agency attempted to take power from the people to solve a problem "Crisis is the rallying cry of a tyrant".
Posted by: SvenThompson | January 21, 2013 10:54 AM
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I am sorry to see this. Anyone preparing returns should be qualified. I really take exception to the person talking about correcting returns prepared by the big box??? and other CPA's. We would all be out of business and we are not. We are going strong doing the best we can. We get 40 hours of continuing education every year. I have been doing this 40 years and can tell you there is so much more for me to learn. I plan on going to as many classes as I can to learn as much as I can.
Posted by: CPATexas | January 21, 2013 10:50 AM
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Finally, the expansive government is stopped in it's tracks! A victory for the constitution!
Posted by: hanco | January 21, 2013 10:43 AM
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Anyone who is against testing, requiring continuing education for, and tracking preparers hasn't got a clue what it means to be a professional! Take a poll of the public: ANYONE who has ever received a CP2000 or other form from the IRS and found that their preparer screwed up due to lack of knowledge of the laws would say "It's about time!" that preparers had to be tested and tracked. It's just RIDICULOUS that EVERY other profession that handles significant financial moments in a person's life (stock trades, financial planning, etc.) HAS to be licensed and our profession does not REQUIRE IT...to the detriment of the public. And by the way, I consider myelf to be liberal.
Posted by: Soundchaser2000 | January 21, 2013 10:30 AM
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As it has done in the past, and as there are numerous examples, the IRS should use its present EXAMINATION powers to vigorously pursue fraudulent tax preparers. NOT CREATE ANOTHER BUREAUCRACY - KINGDOM - TO REIGN DOWN THEIR POWER. Hasn't the IRS shut down tax preparers in the past and assessed heavy fines? Why create another bloating Washington bureaucracy? Aren't we trying to save expenses - not create them. They already have power over us and CAN examine us at will.
Posted by: Nuke | January 21, 2013 10:29 AM
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This licensing scheme is just another trade restriction, the effect of which is to minimize the big guys' competition by independents and small firms. Kudos to the judge and the Institute for Justice.
Posted by: Skipper50 | January 21, 2013 10:17 AM
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The point of all this is that it is the IRS's job to root out fraudulent tax preparers. Testing and CE is moot. My EFIN number is attached to all efiled returns. Once the IRS matches it up, they should and can know if I did the return correctly. Its a money grab and a power grab and to all those who took the exam, you should have waited.
Posted by: CD | January 21, 2013 9:55 AM
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I have not read all the comments here but a few caught my eye with some people posting comments similar to the one stating "it seems tax preparers would wsnt to certify that they are qualified to file taxes for others".
This is a very logical thought but one huge problem with the IRS system as they set it up was that preparers working under the supervision of someone else didn't have to take the test.
I have been preparing taxes for over 20 years and during that time I can tell you that I have seen more prior year returns from new customers from the big box tax firms and CPA offices with errors than I have individual preparers.
I have my CE hours for this season and was planning on taking the exam next season...I really don't have a problem with having to pass a qualification test. I do have a major problem however with exempting thousands of preparers just because they work part time for a huge tax preparation company. As we all know, these preparers are not "supervised" on a return by return basis.
I think it is completely acceptable to require competency testing for tax preparers, but it needs to be across the board and apply to EVERYONE preparing a tax return...including CPA's, franchise tax firms and preparers working for organizations that provide free tax preparation.
Posted by: Clarkdaletax | January 21, 2013 9:45 AM
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Of course we should trust congress to pass legislation fixing this problem. They have done well with regulation of banks. The biggest tax fraud is the lobbying for large company benefits. Spend ten million and get a billion dollar break masked in the law making it available for anyone. Great Return on investment.
Posted by: swearne | January 21, 2013 9:25 AM
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I can only assume the three individuals could not or would not pass the the RTRP test. And this is the type of tax prepares the courts want out there in the industry that taxpayers need competent and professional help. IRS should have the authority to regulate and required all tax preparers to take a compenency exam and CPE's each and every year. And yes as Steven L said "this is an insult to all tax preparers who passed the IRS exam and took required Cpe's" It is also an insult to the American Taxpayer who wanted some assurance that the person doing there tax return had some knowledge. Charlie M, RTRP
Posted by: CHARLIE | January 21, 2013 7:28 AM
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I have been preparing tax returns for 43 years. I have witnessed many changes in tax law and preparation over these years. I can appreciate where all of the young people are coming from, but to put it frankly..you don't know squat. I view this latest attack by the IRS to be yet another form of control that they want. They don't deserve it but they want it. How dare them to say that after my experience and years that I must prove myself to them. At the very least, I should have granted immunity from this test under a grandfather clause. I would not totally object to CE classes as I know that very few will keep up with the changes as they should. New preparers or those with less than 5 years experience just might advance their skills by such an exam. Let's not forget that the tax code is supposedly understandable by the general population and that taxpayers should be able to prepare their own forms. Yea right. How many political friends and cronies are getting my money for this. By the way, I have already completed the 15 hours as well as the exam. If the IRS feels this way, it is obvious that they should allow a tax preparers fee to be a refundable credit on their 1040. Let the IRS pony up all the way!
Posted by: eyemhip | January 21, 2013 7:17 AM
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I am an accounting graduate working in the "retail" tax preparation field due to the economy. I will say this, WE do our best to fill out tax preparation forms correctly. WE cannot be expected to be the auditors for the IRS. Like one person said, people will lie, and it's just true, we do take all the people CPA's don't want to work with.
About the ruling, I'm actually very happy. The testing requirements are great in theory. However, for all of us in the "retail" tax preparation industry, we might as well shut our doors. I do not make enough money to pay for ALL the training requirements which are insanely expensive. Luckily, my company pays for them, but they are set up through the company and it's hard to ensure you have credit for them since they are nothing more than webinars, requiring a pc computer with an internet connection at or by a specific time, with a promise of mailing a certificate later to you.
Posted by: Viper5783 | January 21, 2013 6:40 AM
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I have mixed feelings about this ruling. I am a tax preparer in California and we have always had to be certified. Under CTEC, all tax preparers in Calif. must take a 60hr class to learn to do taxes in the first place. We must then be bonded and have a PTIN in order to legally prepare taxes in this state. I have no issue with that. Continuing education of 20 credits a year is mandatory and you must maintain your bond and PTIN.
I agree with the testing and certification. My problem was that with all of the testing and certification done in Calif, I did not understand why we had to take the IRS exam as well? Our minimum standards required for CA are double that for the IRS and it was always my belief that we should be granted certification based on this alone. Everyone should be able to pass a basic test as a tax preparer. If the IRS is unable to have that authority, then the states should give it, just as CA and Oregon does. We are the only two states that require a person to be licensed to prepare taxes and I am proud of my credentials.
I would've taken this test too and if it comes back that we need to, I will do so. However, I truly believe the IRS or whatever governing body should take into consideration the two states that already license their preparers and factor that into the certification process.
Posted by: Lonnikins | January 21, 2013 6:37 AM
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This is too depressing. I passed my RTRP exam on July 2012, and i am very proud of it. It is so unfair that because of unprofessional people, this exam is not required anymore. So, what is going to happened to the ones that already passed the exam? IRS should appeal this case since there is a lot of people doing fraudulent income tax declarations. This regulation is not because IRS wants to make your life difficult, it is to make all tax preparers more responsible and to show them that taxes are not an easy thing that ANY person can do. It takes preparation, like any other professional career. I am only 23 years old, this is going to be my 5th Tax Season, and i know a few tax preparers with more that 10 or 15 years of experience doing taxes that have not passed the RTRP Exam. Being a Registered Tax Return Preparer should be REQUIRED for all the people that want to do this business.
Posted by: Luzepeda89 | January 21, 2013 4:21 AM
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Being a registered tax preparer means the public can trust the person with access to their personal information. By not having any type of regulatory oversight, incompetent, dishonest people will be preying on average citizen and as taxpayers, we will be paying for their actions in the end. I personally, believe the entire lawsuit is a piece of crap, initiated by crooked tax preparers and attorneys seeking their 15 minutes in the limelight.
Posted by: JadeD1963 | January 20, 2013 9:00 PM
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It wouldn't be as easy to commit fraud with the EITC if the gov't just allowed a set amount of money for each child in the household for people under a certain income level, the payment not based on actual income, and no limit on the number of children eligible. If that were the case, people wouldn't be passing their extra kids around to family members in order to get more money for the kids. If they passed a child around, they would lose the payment for that child. The current system is ready-made for fraud and there is no possible way for a preparer to determine who is lying about it, try though we may. We aren't detectives and there are so many grandparents and other relatives who are raising the offspring of the current terminally irresponsible generation (I, myself, being one) that determining who actually qualifies for EITC in its current form is a nightmare. The irresponsibles who make two or three thousand a year and let their parents support and raise their kids during the year show up at tax time to claim their EITC because the law allows the parents to decide who gets the credit if they all live in the same house. I see this every year in my office and the grandparents who are taking responsibility for their grandchildren because somebody has to, end up letting the irresponsibles get the EITC on the children to keep the peace. Whoever can show that they provided the most support should get the EITC. The way the law is written now, the actual support of the child doesn't enter in. EITC is given because they are low income and have kids, period. We can't do anything about it. A flat fee per child based on who supported the child would be a much better idea, though admittedly not as popular as the current method. My clients often refer to it as the "Unearned Income Credit" which pretty much hits the nail on the head.
Posted by: anitamartinez | January 20, 2013 7:00 PM
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This is the greatest news I've heard today!
I'm a certified tax professional and I have been loosing sleep, time, money and effort wondering if I will eventually pass this RTRP which has now been thrown out of court.
What a scam this was for any agency in this great country, USA, attempting to steal us individuals from doing what we are passionate about doing.
I love preparing tax returns and for a government that acts like a dictatorsh to enforce the RTRP on us poor tax professionals is evil and the those behind this scheme at the IRS will have to answer to our Maker one day.
God came through for me today as he always has and God does provide for each of us when we simply ask God to help us.
I have have praying for this RTRP Nightmare Enforcement by the IRS to go away and today it did. Thanks You, Jesus, for bringing justice and for setting the tone.
In God We Trust!
Posted by: johnnydoe | January 20, 2013 4:49 PM
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I agree with Michelle that just because I don't have the three letters after my name doesn't mean I'm not qualified to do taxes. I've been preparing taxes for over 13 years now and I love my clients and my clients love me. I don't have a problem having to take classes every year; it only makes sense if you want to know the laws for that upcoming year. You can't prepare taxes if you don't know what a taxpayer can claim or not claim. I owe it to my clientele to be the best tax preparer that I can be. However, I am in school working on my BA in Accounting and that will just make me more marketable in this very competitive business. My only complaint is the testing. What about the test I took when I finished my classes to become a tax preparer. That test was not easy and I realize that it was some time ago that I took those classes; I was still recognized as passing the exam and received a certificate that was in compliance with the IRS and able to call myself a tax preparer. I won't lie to you, I HATE tests; they cause stress, anxiety and some people just don't function well under the pressure of taking any test. So, I hope that the testing side of what the IRS wants to do is done away with. If the IRS knows that I've taken classes and am up to date with my education, that should be enough. When you take these classes, you have to pass a test on what you've learned, I would hope that that counts for something.
Dawn
Posted by: pickonetwo | January 20, 2013 2:04 PM
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To me, the point, of taking the IRS to court over this issue and of the ruling is simple. It was a blatant over-reach of federal power and the court agreed. End of story. Now, if someone could actually successfully prosecute the rest of the federal entities that are acting against the Constitution, we might see some light at the end of the tunnel. With that said, yes, require licensure of tax preparers; however, let the states do it, just like they regulate the licensure of CPA's, etc. Now, to JMHO, in regards to "archaic" paper filing, even in this highly technological world in which we find ourselves, sometimes there are situations which require paper filing, just ask the IRS or have a return rejected for some "technological glitch". Technology is not the panacea many believe it is and will someday come back to bite us in the rear. I am not a CPA. I do however, have a degree in accounting, years of experience in a CPA firm, years now, as a self-employed tax preparer (yes, I'm a RTRP), and have my own single person office. I can tell you that I resent the hell out of anyone telling me how to run my business. REQUIRING that I efile personal returns and REQUIRING businesses to online file all of the payroll information, etc is exactly that-the federal government telling me and other businesses how to run our businesses. I realize that a person can file the payroll information by phone also now, but I believe that came down as an afterthought because not everyone has online access! That's my next point. I live in a rural area. Fiber optic to the home/bldg is at least one year away. Top speed right now is 1.0 mg by satellite. This is an incredibly frustrating situation when the world is cramming high speed technology requirements down the throat of a horse and buggy infrastructure. Just remember, every person is unique, every business is unique and every situation is unique and a one size fits all answer is not going to work. That's why the feds need to quit trying to micro-manage the entire country. As the judge pointed out, "...because the IRS's new rules is ultra vires". Meaning according to Merriam-Webster, the new rules are "beyond the scope or in excess of legal power or authority". Again, to my mind, the entire point of the suit.
Posted by: jbetatum | January 20, 2013 12:49 PM
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Actually, I believe the court ruling is good. I believe that tax preparation should have regulation and continuing education requirements, as I do as a CPA, but I do not believe the IRS can objectively administer such a program for the benefit of the public. The IRS has a specific bias and with the ability to take away a preparer's "privilege" of preparing returns creates too much leverage for them. It makes the IRS the legislature and the judge and jury.
Specifically, at the IRS seminars in Chicago last summer, IRS personnel indicated that tax preparers were now the IRS' first line of auditors. They also indicated that they were going to, but did not as of last year, consider any preparer who did not e-file even one return as being non-compliant and subject to being barred from preparing returns. Seemingly, in my opinion, too harsh a punishment for the "crime". But they get to be the rule maker and the judge and jury.
Numerous IRS personnel also mentioned that the IRS is under extreme budget pressures. Easily, the IRS as the legislature, judge and jury, could mandate that preparers are now going to do IRS auditor work and if they don't it will be a discreditable act and the "privilege" to prepare returns will be revoked. Why shouldn't the IRS require that for schedule C for example, that preparers must balance client bank accounts against invoices to ensure there is no unreported cash transactions. Why shouldn't the IRS publish comprehensive checklists for every form tax preparers must complete in conjunction with such forms. Such requirements would help the IRS and cost the IRS nothing. They could even sell the checklists they might mandate to defray costs. Why shouldn't the IRS charge a fee per return? Easily reasoned that preparers who file more returns create more work for the IRS so they should help defray costs.
The implication is the IRS cannot be objective when they have a very vested interest in pushing their work down to preparers and associating significant penalties for preparers who don't do their work as they see appropriate.
As a CPA we have standards of objectivity as well as competence. Let's ensure competence and objectivity is part of the preparer landscape? I'm not real big on having the landscape established by politics, but it is probably better than the IRS.
Posted by: tjbcpa001 | January 20, 2013 10:21 AM
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After reading many of the comments I get the impression the more comments that get posted the more opinions we are going to receive.
The basis for the CE credit regulation is simple. To provide a mandatory method in the dissemination of information needed in the proper preparation of tax returns. Nothing wrong with it.
The basis for the RTRP testing also is also simple. To confirm that those taking part in the tax preparation industry are qualified. Nothing wrong with it.
None of these regulations could boost to capture 100% of those preparing tax returns, inclusive of CPAs, EAs or "tax" attorneys. We read, almost on a daily basis, the violations performed by even the that were regulated prior to the current IRS regulations governing RTRP individuals. But that's not the issue. Continued monitoring of those that violate current IRS Code is the only solution for all that prepare tax returns.
However, the IRS, is faced with a contining problem of fraudulent returns primarily in the area of "entitlement" programs. Those programs that folks believe are "coming" to them simply because they live here. EITC being the largest of them all. As a result we will always have individuals preparting tax returns fraudulently. If we examined those returns we would find either a "tax preparer" did not sign the return or designated them as "self-prepared" so they cannot be discovered by the IRS. BILLIONS of dollars are lost or should I say, paid for by legimate taxpayers like you and I. The phasing out of this program is mandatory in order to restore the legitimacy of our tax system and not make it an avenue to gain "income".
Yes there is those that need assistance for their families to exist, but let's not make the filing of a tax return that assistance. We're making is too easy!
The inclusions of credits that are not dependent on "income" from legimate sources (W2s, 1099s, etc.) not babysitting, house cleaning etc. (nothing wrong with working hard). It's these creative sources are what are used for qualify for EITC and will continue to a "thorn" in weeding out these fraudulent taxpayers and tax preparers that overlook these obvious issues. Many of these taxpayers are concentrated in urban areas and are not difficult to identify which leads me to believe that the IRS should be concentrating their efforts, financially and with ample staff, directly to the root of the problems they are trying to resolve.
Posted by: LTS | January 20, 2013 9:25 AM
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I don't believe this threatened anyone's lively hood. I am a small business, I have been doing taxes for 35 yrs. I too was waiting to be Grandfathered. I passes RTRP in Dec, and required my part time preparers to do the same. I have dedicated myself in the low income side of clients, in the 1040 series. I don't charge what H&R charges. The revenue I generate for myself and my family is seasonal. I do have financial issues during non season, but the cost of doing business covers my continuing education, rent, office supplies and still leaves a fair amount for me. I learned a lot studying for the test. I am currently going to take the EA and have also completed Test 1. I am restricted from helping my clients with the POA. My clients trust me, and can afford me to help them, the IRS does not trust unless I have the EA. My 35 yrs means nothing to them. I see the fraud everyday, in the Child Tax Credit, and the ITIN. And the new laws passed will not weed out that fraud. The average Fraud with CTC is $5,000 per client. And the amount cheaters is not going down. I have a fair amount of clients, but will not cheat for them. They can do down the street, as there seems to be a tax office on every corner. At one point I was ready to quit doing taxes. I am frustrated with IRS and ITIN issues, POA issues, and the fraud, and even if unscrupulous tax office are shut down they re open with a new EIN at the same address and phone #. The attitude is (among those offices) There are over 8 billion ITIN clients, with more that 35% of those cheating for bigger refunds, the IRS cant audit all of them. So if a few got audited, it was the for the good of many. It was wrong to shut down the RTRP, and the VITA sites do need regulating because they don't even have to sign the return. they get to hide behind the VITA letters. Requiring continuing education helps everyone.
Posted by: linda.cavez | January 20, 2013 9:17 AM
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I think most people who have their taxes prepared by a professional would not bother coming to this site as they do not have a desire to learn what we have been trained to do, so the comments like "you should have your return prepared by a CPA or EA or you'll be coming to me and I'll bill you even more to correct their mistake" are disturbing. I don't think most taxpayers who have their returns prepared would ever see this site, let alone this thread, so who exactly are you talking to?
I've been preparing returns for a little over 13 years, both in a CPA firm and with, for lack of a better word, "retail" tax prep organization. The only real difference is the clientele, because we know that tax prep does not change, only the rules to which we must abide by.
Yes, some folks pay for the three little letters after their name, but it does not make you more qualified to prepare a return. There are mistakes made by CPA's, EA's as well as us "little" people with just a PTIN. I take offense that because I am not a CPA, I am less qualified to prepare a return. I know how to read and research and if there is something unusual with a tax return, gee, I guess I'll just "plug" a number to get it to work so my client gets more money. Really?
Michele
Posted by: MMS34 | January 20, 2013 8:44 AM
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In response to many posts, I am a Tax Preparer and have worked for H&R Block, Jackson Hewitt (JH), and and independent. First I take issue with the person who said Jackson Hewitt has instructed their preparers to wait until Dec 2013 to take the required IRS test. This is not true. I have worked for them for the past 5 years and have only been advised, by JH, to take the test as early as possible.
Second, most of you seem to be E.A.'s or CPA's and many don't seem to believe that Tax Preparers are competent enough to prepare accurate tax returns. Most of them are. JH provides an overwhelming amount of training and information materials to all of their tax preparers, free of charge. We can get our CPE's, which are IRS approved, while on the job.
Third, I am against the IRS attempts to regulate us and get us to do their jobs for them. Every year we have more and more due diligence (invasive) questions, regarding EIC, to ask clients. If clients are not going to tell the truth, they are not going to tell the truth! Believe it or not, people talk to each other and many of them know just how to answer the questions to be eligible for EIC. All clients are aware of the penalties of fraud!
Fourth, many seasonal tax preparers are retirees, disabled, homemakers, or just people who are in need of employment and many on some type of fixed or limited income. We are afforded a low hourly pay while the client is billed in the hundreds. Still we are competent. Having to pay the IRS money to work makes no sense! What are they doing with the money? They are certainly not using it to improve the competence of their own employees. It is us, seasonal, tax preparers who ask all of the questions and prepare more accurate returns than any CPA. We take the clients you don't want! No, our target market is not business returns, but we are excellent with Individual Tax preparation.
Fifth,the IRS failed requirements would have done nothing to stop the people who are not registered or have PTINS from continuing to prepare paper returns. In my mind, that is where a lot of the fraud is but the IRS probably has no way to find them, which is why they target preparers who are more visible and honest.
Just my take on things
Posted by: renalexa | January 19, 2013 11:12 PM
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This common thread I keep seeing, if you are a legitimate CPA, EA, Attorney, or RTRP is that we all share a concern for the integrity of the tax preparation business. Calling each others designation out is counter productive, and hinders what we all hope to see. With any profession, there is good and bad. Dr.'s operating "pill mills," pilots flying drunk, barbers and hairdressers with no skill, etc... yet all require licensure or certification. The titles do not make you "qualified" if you still make the choice to taint the profession. Those that make that decision will not be 100% eradicated, as with any profession, or only if "caught in the act." I would like to do some research on when the EIC began and how if affected the tax prep industry. Right there may be the integral key to stop 98% of the fraud.
Posted by: taxgirl370 | January 19, 2013 10:55 PM
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While I do not enjoy the government telling anyone what's what, the RTRP designation would set me apart from those "non tested". If the test is stil available, I am going to take it. I will, of course, continue CPEs whether required or not.
My only gripe is that those who have been in the program for many years (20 plus years for me) should have been grandfathered with the CPE requirement in effect.
This fight is FAR from over. The next round should start shortly.
For those who have already the RTRP, those folks should be able to use the designation - they earned it.
Posted by: guarddat | January 19, 2013 10:09 PM
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I am one of those who recently passed the RTRP exam. Yes, I am somewhat biased but will try to be as honest as possible and give my thoughts. When this requirement first came out I was very concerned that the government was again stepping where it shoud not be. I have prepared tax returns for over 30 years and although this is the case I still studied because the mind gets a little sluggish as the years go on. What else concerned me is the ruling only had affect on those who were not CPA's or attorneys. The CPA one is a definite agree with; but as far as attorneys! Hey, I know attorneys who only practice real estate, divorce, financial, and so on. Most have no extensive knowledge or training in tax prep and yet they are not required to compy with the RTRP requirement? Does not make sense. It would appear that lots of lobbying came in to play during hearing etc. when this was all being implemented.
With all this said, I think a superb method to handle this entire situation is for the IRS to do away with the MANDATORY requirements and to make the RTRP designation a voluntary program with all the current requirements and those who wish to have the credentials may do so. The IRS should then also be able to post on their dedicated website a listing of all those persons who have shown they are competent to prepare returns. The reason for the posting is not to recognize the RTRPs, but rather to inform the public of persons whom they feel are competent and thus giving the taxpayers some confidence in the preparer they choose.
At this time, I am not really sure of the IRS motives in instituting the RTRP program. I do know that many organizations did participate in the initial program comments and I do know that the amount of fraud has been and is in the millions if not billions of dollars. Not being a legal person I do not know if in fact the IRS has overstepped their bounds; only time will tell. But, I do believe that if this case is upheld that a voluntary program would be a benefit it all concerned, being the IRS, the taxpayer, and all the professional people involved in the tax preparation business.
Posted by: tonya030 | January 19, 2013 9:54 PM
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As a tax preparer I have mixed feelings about the decision. I think that hundred of thousands of people have been saved from unemployment. That's a good thing during this difficult economic crisis we've all been suffering through during the last four or more years.
After reading most of the remarks I am astounded at the number of comments that are difficult to read and understand. I found myself having to re read them over and over to be sure I understood what the writer was conveying. And this coming from supposedly professional people!
Let's face it: we are all overburdened with regulation in all walks of life. Everytime something happens that is unacceptable - bingo a new regulation. However, educating tax preparers is a good thing, but I have to agree with the many who stated that it won't stop fraud, necessarily. Those who want to cheat, will, regardless if they are certified or not.
As far as the EITC is concerned; yes, that is a real problem, but the IRS began to address that problem a year ago by implementing a more forceful 8867. For 2012 returns they have expanded it even further by notifying preparers that they will be subject to a $500 fine if they avoid asking the pertinent questions to determine whether applicants are legitimately entitled to EIC. (Maybe someone should look into that fine business to see if in fact they can do it!)
Also, the real purpose for the PTIN assignment was to eliminate preparers from having to list their personal SS#'s on tax returns for security purposes. Nothing wrong with that.
All in all the purpose behind the recommended regulations makes sense, but the current times make implementing that proposal difficult at best. Maybe when unemployment gets down to 6.4%, or lower, might be a better time to consider having Congress authorize the IRS to go ahead with their certification program.
Posted by: JCapone | January 19, 2013 9:44 PM
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I have mixed feelings about this court order. I passed the RTRP in Dec 2012. The preparation to pass the test has only made me a better tax preparer. Looking ahead to 2014 (filing 2013 returns)...are we going to have to deal with the insurance requirements under the Affordable Health Care act? If so, it might be good to have a RTRP certification, especially if we now have to get into the health care insurance business.
Posted by: JSS | January 19, 2013 8:56 PM
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I am one of those that so many of you refer to. I have taken and passed the test and met all requirements. I go out of my way to prepare accurate returns and to keep up with changes.
Please some of you read who is preparing the returns you're talking about.
They are not all "those" preparers, many are Attorney's, CPA's and EA's
Posted by: Redtaxlady | January 19, 2013 8:20 PM
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It is funny that while IRS required all tax preparers have to be certified but no one pay attention of the VITA program was funded by IRS for so many years. The VITA preparers no need to have any tax knowledge experiences, nor college degree, just 3 days training to do EF, and could be any one who know how to use the computer sets. Due to their ability, they are the one let so many of EIC's cheaters filing went through. VITA preparers are the one IRS should required to have PTIN and certified at first. Another problem is the cost to obtain the minimum 15 hours attending class certificate. Many prepares with low volume clients could not afford for the cost of keep up to date the certificates and license fees yearly. Specially for people who live far away from the location of class. The IRS ruling force these people out of service or will find some another way around to avoid the requirement but still doing their jobs.
The yearly PTIN fee just a new way IRS try to collect the "permit" fee to do tax filing (for IRS itself)> $65x400,000= 26 million dollars. Or over 100 million in 4 years fee. It should be free to all active and good standing preparers. Because we are all working for IRS anyway.
The new ruling yesterday showing that again there is another failure from IRS in trying to force the preparers out of the services. Who could guarantee that CPA or EA levels did not violate tax filing process? Why just only one group, but not all? People no wonder why IRS now has to go court hearing to defend it ruling.
Posted by: KODY | January 19, 2013 8:05 PM
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I am a CPA and I can tell you that what really sucks about this is that there are a TON of fraudulent "tax preparers" out there who do a lot of fraudulent tax returns. Their SPECIALTY is earned income tax credit fraud. Do some research and see that there are BILLIONS of dollars of fraud every year - for which the IRS is only able to recover a small percentage. I see these preparers all of the time when I get new clients and they have left one of these so-called "preparers". A lot of them specialize also in the illegal/legal immigrant population, assisting them to further screw the TAXPAYERS out of money. Earned income tax credit is a refundable credit which should be completely done away with. I am so tired of the hypocrisy of this government. They could practically balance the budget by getting rid of this stupid credit. This credit is WELFARE and it's "income redistribution" right there on the tax return. The IRS was trying to get a handle on some of these CRIMINALS. A lot of these CRIMINALS file these tax returns - just like "Mast_48" above - as "self prepared". In other words, they don't put their criminal names on them. So: Let the buyer beware. You get what you pay for! A lot of these people have ZERO education and they are pure and simply thieves. I get irritated, not because I lose business - but because that is MY tax dollars going to entitlement cheats. Sick of it! Get rid of the earned income credit completely - problem solved. Most of these hucksters would go away because they collect their fees on how much "refund" they get for people.
Posted by: TaxCPA2 | January 19, 2013 5:50 PM
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I agree with Ddrumm55. I am a sole practitioner who passed the RTRP exam three weeks ago and am currently preparing to take the SEE (Enrolled Agent) exam. I have also amended many tax returns prepared by incompetent preparers (and CPA's). By cleaning out the incompetent and unscrupulous preparers, it improves the industry's reputation for all of us. If you can't pass the EA exam, you shouldn't be in this business anyway, become a QuickBooks advisor instead.
Mikeo24
Posted by: mikeo24 | January 19, 2013 4:37 PM
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raguilar0419 I tried reading your post and either your grammar or typing is less than professional. By your post, I see a serious issue with allowing you to prepare a tax return. A person wanting to practice law is required to meet the minimum requirements to practice. An individual can represent themselves in a court of law without the professional requirements. The same should be with the preparation of tax returns. An individual can choose to prepare their return themselves, but if they pay to have someone prepare the return, that person paid to prepare the return should meet certain licensure requirements for the protection of the public.
Posted by: Ddrumm55 | January 19, 2013 4:14 PM
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The only people that this would have put out of business are those that dont keep up with the new laws and are simply afraid to take a test. The test wasnt due till end of this year anyway. Jackson hewlett advised all it's company stores and franchises to wait till last min to crash the system ..... that shows how afraid they are of simple testing of people Those that do as the IRS requires are the only ones that will be put out. I suggest those that took and passed the test be hired by the IRS
Posted by: jemco2 | January 19, 2013 4:08 PM
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I am a CPA and an EA and one of the areas I specialize in is tax audit representation. The majority of the cases I represent are tax returns prepared by preparers that either do not have the experience or take the time to adequately research the internal revenue code to prepare a complex return.
Taxpayers are the ones that lose when an unlicensed individual prepares their return. A CPA and an EA are required to demonstrate their competence to obtain licensure, required to attend continuing professional education, and can have their license to practice revoked.
Unlicensed return preparation allows weekend tax hackers to prepare return and the public pays the price. I can't tell you how many times I have reviewed a return and asked the taxpayer if the preparer they went to was licensed and their response is typically " don't they have to be licensed to prepare a return." The majority of the public believe that if they go to a tax franchise the preparer is licensed because of the advertising they see on television ads.
You get what you pay for, and if you pay them a little right now, I will see you later and bill you a lot more to help you fix the mess they created. Here is a suggestion, always use a CPA or EA to prepare your tax return! Ask the person who wants to prepare your return if they are a CPA or an EA!!! Doesn't mean there will not be any errors or issues but by going to a CPA or EA you know they demonstrated their competence to practice!!!
Posted by: Ddrumm55 | January 19, 2013 4:03 PM
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I am a CPA "Inactive" who teaches school and who does more business consulting than tax work. I, too, had to get the cpe and was planning on taking the test, but now I guess I'll wait and see. For all you tax preparers who are screaming how unfair it is or why everybody should take the cpe and pass the test. Have you ever thought that that might just be the beginning. By the judges action of curtailing the IRSs' power He just might have called for a more reasoned and prolonged discussion on where the tax prep industry should be heading. If IRS could whip up rules for us to pass a little test and do some cpe. Just think if they came back and said "Hey" we now have the power to require you to become a CPA or Lawyer. The precedent is not set in that form now. You better be thankful for that judges ruling. He is much wiser than you all are giving him credit for. My advice to be safe if the IRS is put back in charge - Get an 150 hr. Accounting degree or Law degree and pass the bar or CPA. Then really start screaming. This ruling was the best thing to happen for tax preparers.
Posted by: charleslaw93@yahoo.com | January 19, 2013 3:59 PM
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I disagreed that the ruling is an insult. The IRS already regulates the Tax business. Circular 230 explains the power of the IRS as related to any incompetent Tax Preparer, weather the person is a CPA, Enrolled Agents, or RTRP, that you will be suspended or removed from the practice.
I am sure most preparers are qualified, however, unlike every profession, you will have people who will intentional be a crook. Some Cpa, Enrolled Agents and etc. have all made numberous mistakes, but are stay allow to continue working in their profession.
I stay think that the test is a good idea, and should be taken by RTRP.
I must commend the Lawyers that stood up for thousands of Tax Preparers. The Law is the Law, there is no way aroung it, the IRS should know.
Posted by: Kelvin G
Posted by: dumcat | January 19, 2013 3:31 PM
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I am a CPA and the standards we abide by are there to protect the public.
I don't see the difference between protecting the public in the financial statement arena vs the tax arena. The investing public, shareholders and stakeholders don't want willy nilly reporting so they enlist independent CPA's. The taxpaying public shouldn't want willy nilly reporting either because it erodes the public trust. Think about it, what's equitable about Joe getting a cheater to prepare his tax return and Mary who doesn't. They end up bearing different tax burdens when they really shouldn't.
I agree with the court decision. The IRS should not be and has not been given the authority to be the standard setter for tax preparation. But the IRS is no different from any other Federal agency who can demand that the information they receive come from a trusted source. All agencies who receive Federal funds of over $500K must have financial statements audited by an independent CPA so that the agency can trust the numbers. Those with less than $500K may be required to have audited financial statements by users of those financial statements. Why should the IRS be any different, it wants to trust the numbers on the tax return? What about mortgage companies, banks, etc. and others who use the tax return information to make decisions, don't they want to trust those numbers?
If the IRS were willing to allow another body (outside itself) to be the authority on the matter then why couldn't the AICPA's existing standards work for the CPA's, the attorney's professional organization must have standards for their practitioner's and EA's probably have standards for their professionals.
Couldn't the IRS determine like other Federal agencies such as HUD, Health and Human Services that it will only accept tax returns of taxpayers (say those who file anything other than a short form - 1040EZ and 1040A) if professionally prepared, be prepared by a CPA, attorney and EA because they meet certain standards.
Then these three bodies (CPA's through the AICPA; attorneys through their professional association and EA's through their professional association) can self-regulate as they do for all their other services.
Posted by: vpickens | January 19, 2013 2:11 PM
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Well it's about time. I knew there was going to be a problem with the # of seats available to take the test and the # of preparers needing the exam.
But it all comes down to the same issue as gun control. Control the preparers or gun purchasers and tax cheating and violence will disappear. If you think for one minute that making all preparers pass an exam is going to eliminate the cheats, look at your reject files for last year for previously filed returns, and then look me in the face and tell me this will solve it. The people that are going to scam the system will continue to scam the system.
Now if they actually sent these scammers to jail for 5-10, you might see some improvement in the compliance, but when an incarcerated individual can file $400,000. of phoney tax return refunds, you've got to wonder if even that will solve the problem.
I think we should ask the out-going Tim Geither(sp) what's the best solution.
Of course, my favorite has always been going to the flat or VAT tax. Has the same socialist flavor - of taxing everyone as they use, and would take care of the preparers, as we wouldn't need them anymore.
Posted by: PAT | January 19, 2013 1:46 PM
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As everyone has posted, we all know that we need some type of regulation to try an keep the taxpayer "safe" from an incorrect return being filed. Ultimately it is the taxpayer that will suffer. The taxpayer is responsible for taxes due. Sure it has been difficult to complete the IRS guidelines, and in my opinion should be modified, but what is wrong with knowledge? The more we know the better we can service our clients. The more we know the more our clients trust us. There has to be a solution to this dilemma. Maybe State regulation is the answer.
scw
Posted by: scw1206 | January 19, 2013 1:43 PM
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I think that IRS will ask congress to amend the statute to include some small text changes.
The statute can be to read: ...representatives' who 'practice' before (IRS) or 'prepare tax returns for a fee'.
End of story.
Posted by: georgeead | January 19, 2013 1:35 PM
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While I'm no fan of more and more federal regulations (or State for that matter), this is a bad call by the judge. I'd look for those dysfunctional 535 members of Congress to take this up in a bill once someone bothers to point out all the revenue it's losing by incompetent and crooked preparers. Sort of like the Dr. Soliman case involving home office deductions, it's an unintended consequence, this time by the judges doing it to the IRS, rather than the other way around.
Since I'm already an over-regulated California CPA for 40 years, I don't have much sympathy about anyone complaining about acquiring the knowledge necessary to pass a simple test. To you that would complain, would you also go to an unlicensed mechanic to repair your car? How about an unlicensed physician to care for you when you are sick?
And to the idiot that thought it was a liberal vs. conservative issue, you really need to stop listening to Fox noise.
Posted by: topbeancounter | January 19, 2013 1:28 PM
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I am a tax preparer and although we're no longer required to take the exam, I still want to take it to have the credentials. I do agree with many people stating that there should be some sort of regulations. Taking the RTRP is not going to make a fraudulent tax preparer and honest one. Yes the IRS was implementing the RTRP, however crooks can take an exam and pass it. So guess what, now you have a certified crook in the tax industry. regardless of what the IRS or any governement entity tries to impose, crooks will always find a way. The one thing out of many that bothers me is that honest tax preparers are really the ones paying for the crooks who commit fraud.
Posted by: Cherishwisdom | January 19, 2013 1:17 PM
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Are you kidding me? I just passed my RTRP last Saturday! What does this mean for the past year that I have worried about taking this test, the large amount of money spent on review courses, practice tests, study guides and not mention the money spent on over 20 hours of CPE! I have been doing taxes for 38 years and thought this was crazy that they didn't grandfather some of us in and then to go to all the trouble to take and pass the test, just to be told a week later it wasn't necessary.Like the person above just said. An insult to those of us who have passed it! Bet all of these review course companies are screaming today...lots of money they won't be making. Just makes me mad at all the time and money now wasted.
Posted by: kmbamb | January 19, 2013 12:51 PM
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The pros and cons comments written are informative and educational. I have been honest CPA ever since I started preparing income tax return. The comments made by licensed and unlicensed preparer suggest what is in store for America. Liberal attitude is going strong and conservative trait is disappearing. Good luck to all of us.
Posted by: Unknown | January 19, 2013 11:50 AM
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Like most everyone else, I dislike government regulation. However, I think this decision is a disservice to taxpayers. I liked the regulations. I am a CPA and therefore have to take a minimum of 40 hours per year in CPE, and have passed the CPA exam. I do not agree that CPA's EA/s or attorneys are treated as privileged characters. We have all exceeded the simple regulations proposed by the IRS. We have more than earned the exemption.
Now, once again, the guy that works at the carwash can legally hang up a shingle if he so chooses and be a tax preparer. He will be just a legal as a CPA EA attorney or someone that has passed the test. Like someone already mentioned, nothing stops the unscrupulous person that does not sign returns from business as usual.
The taxpayer suffers in the long run.
Posted by: yellowdogluvr | January 19, 2013 11:39 AM
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It's sad that so many people feel we need more government regulation. Here we go again with "the good has got to suffer with the bad". If we continue to think that the government has to regulate everything, how can we ever do anything? I don't think the public neither the IRS will suffer from this decision, because it doesn't matter whether a criminal has passed a competency test or not; they'll always find a way to get around the system, cheat the client, or break the law. So the defeat wasn't a win for the fraudulent and the unqualified preparer. It was a victory for the honest small business person who has prepared taxes for decades, while providing their clients with honesty, dignity and integrity. And yes, without errors despite not having to pass a competency test. A true tax professional will always abide by professional ethics and due diligence when preparing taxes for their client. I believe that taxpayers are smart enough people to review their tax return before authorizing it to be filed. It doesn't take a rocket scientist to know when 1+1 doesn't equal 2. Why should a tax professional be required to learn and test for every aspect of the tax system when they may only specialize in few areas? Continuing education is one of the keys to providing inexperienced tax professionals with the necessary skills level, and to keep criminal minded tax preparers out of the tax preparing business. Even if preparers are tested for competency and pass, how are they going to expose the taxpayer who chooses to provide fraudulent information to the tax preparer? Would the tax professional be considered as a fraudulent preparer because the taxpayer provided fraudulent information? Yes, testing may reduce the number of the unskilled and fraudulent tax preparers from practicing, but if the individual was smart enough to create a criminal scheme, they're probably smart enough to pass the competency test as well. As tax professionals, we're not on the IRS payroll. So, I think we should be allowed to do our job with honesty, dignity, and in
Posted by: taxbus | January 19, 2013 11:39 AM
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If anyone should licensing tax preparers, it should be the states.
However, if we are going to proceed down that track, the states should also license bookkeeping service providers! There are just as many terrible bookkeeping providers as there are tax preparers.
The end result is how much regulation our industry desires. As much as I gripe about the AICPA, at least it is semi-self-regulated.
IMHO, it should fall down to individual responsibility. If individuals are ignorant enough to go the cheapest company on the block, then let them live with the results! It should not be the governments responsibility to protect people from their own stupidity. If the individual has an inappropriately filed tax return, let them live with the consequences of being cheap and uninformed.
Posted by: krueK | January 19, 2013 10:56 AM
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How many small operators thought about quitting due to the regulations, decided that it would be worth complying because there would be many others who would be weeded out, and are now out the time, effort, and funds that have been invested ? Should IRS make the RTRP voluntary? Dan Donoghue in Buffalo NY
Posted by: dandonoghue | January 19, 2013 10:34 AM
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Agree with RTRP exam, regulations and continue education for tax preparer. If you provide services and charge a fee, you need to be regulated to ensure you are providing correct services and you are complying with the law. This is a profession, we are not selling apples and tomatoes. Any profession, CNA, Realtor, loan officer, brokers etc, etc, may not at some point require you have a bachellors degree but requires some type of education and certification such as state exams, fed licenses etc. If you are not an attorney or a CPA and did not completed 4 6 to 8 years of College, or university and do not have these degrees, then you should be regulated and should be registered to provide paid services. I am a tax preparer, NOT A CPA, NOT AN ATTY.
Posted by: JATAX | January 19, 2013 10:12 AM
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As a tax preparer who was affected by the new regulations and who complied with all of them, as did my employees, I have mixed feelings on this new ruling. There is definitely a need to regulate the industry to weed out the incompetent, but the ruling that a new untrained employee has to get a PTIN in order to be trained using actual returns is ridiculous. In order to get a PTIN under the new regs they must also meet the 15 hour continuing education requirement and by the end of this year pass the test. They don't even have the basic education most of the time, so how can they pass continuing ed and competency tests before they can be trained? A good deal of the material we had to cover for CE had absolutely nothing to do with what I need to know to run my business and it was total Greek to my part-time employee who has had only one season of working with taxes. I recognize when a tax return is above my pay grade and I will send them to a CPA when that is the case. The bottom line is that we do need to prove that we're competent to do taxes at a certain level but a lot of the requirements that came into being with these new laws are just an undue burden on those of us who are already diligent about the returns we prepare. I hope they figure out a better way.
Posted by: anitamartinez | January 19, 2013 10:01 AM
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I think the reason that folks object to the e-file requirement is again, because of the expensive software required to process returns. If you are a very small business, this is a burden.
Posted by: annemcdowell | January 19, 2013 9:53 AM
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I believe the lawsuit centered around the financial burden placed on small businesses that prepare tax returns, rather than objecting to the competency part of the requirement. One business, in particular, prepared returns for low income clients with very little margin. CPE is very expensive. Perhaps the IRS should have offered all of this without the burden of additional cost and no one would have objected.
Posted by: annemcdowell | January 19, 2013 9:51 AM
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In our state, you need a license to have a nail salon, but not to file taxes. Makes no sense at all. The IRS rule was meant to protect taxpayers and try and eliminate fraud. It appears we would rather see the government ripped off to the tune of billions of dolalrs with the filing of fraudulant returns than make life better for the people in general. Great interpretation of a statute that is from over 100 years ago.
Posted by: serchul | January 19, 2013 9:48 AM
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You know that because of these twists and turns, many part-time workers are paid double rate tax. Company originally charge taxes to form a common check using a regular cheme: federal-state-SS-Medicare tax withholding. At the end of a year, part-time worker recieve W-2 where the responsibility for the payment of federal and city taxes again falls to them. To prove anything is impossible. These companies have done this by substituting both CPA firms under the blows of providing a completely different scheme-payroll company the common cheme, W-2 company- the second form.
Posted by: nadezdamindyuk | January 19, 2013 9:27 AM
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I agree with the comments that the states should regulate tax preparers. I have reviewed many returns that were prepared by non-professional/non-registered tax preparers. The high incidence of bone-head errors is absolutely unacceptable. The general public has no recourse. They can file a complaint with the IRS of the state Attorney General, but there is no consumer protection legislation out there. Putting the professional requirement under the auspices of the states' accountancy boards would enhance professionalism and assist in the elimination of those who are not capable of preparing returns correctly. It allows the consumer to seek recourse against these individuals. As CPA's, we have a standard that must be maintained, and, if we make mistakes, we are accountable to the client and the accountancy boards.
Posted by: hattencpa | January 19, 2013 9:04 AM
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Power grab - NO. Regulation of preparers - YES. Protect the public!!
Posted by: bsimmonscpa | January 19, 2013 8:56 AM
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From my reading, as a CPA most of this does not apply to my practice. What I find interesting in the comments is how ready everyone is to have the government/IRS add yet another layer of control and regulations. This from the same Group of people that typically complains of all the new tax, health and general expansion of every law which affects us and our clients.
The true solution is to remove sections from the IRC that have no business being part of the tax code. Remove the EITC, if individuals want government assistance make the go to a government office and apply for it. Remove all the credits and deductions which attempt to encourage or discourage economic activities of taxpayers.
Quit making tax preparers the policemen!
If we simply go back to paying taxes based on what we earn the whole county would be better off. But, if we did that I guess some of you would be out of a job.
Posted by: krueK | January 19, 2013 8:54 AM
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A GREAT decision for LIBERTY. It's not about insults, bad preparers, competency or fixing the system as many of you have been led to believe. Maybe you want to feel better about yourselves by removing economic opportunity from others. The government would issue you "special privileges"as they called them(you know,the ones they took away first). Wouldn't that feel great? You could make disparaging remarks about others citing how special you were and they weren't. This was all about seizing control of another aspect of our lives and liberties. It was also going to pay off in fees and new federal jobs. This administration is getting good at it. Soon only police and soldiers will have guns. Then we will all be safe. Electronic filing and refundable credits, redistribution of wealth (welfare) through the tax system are the problem. Identity theft, over 1.1 million in 2011, up from 51,000 in 2008, is rampant. I will be performing full cavity searches on all my EITC clients to insure that they are not hiding any income. Congratulations America.
Posted by: hisexcellency | January 19, 2013 8:41 AM
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I don't know how the IRS will deal with those who already passed the exam and took the CPE. I believe the Congress should give the authority to the IRS to continue this job to make the change in the Tax Preparer industry. The new regulation would help those Tax payers and even the honest Tax Preparers.
Posted by: FRANTZDESIR | January 19, 2013 8:30 AM
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While I agree that the power grab was unjustified, I do feel that the whole registration/testing concept was good for the industry. I suspect that if this requirement is struck down for the IRS, I think states will pick up the ball to require licensing at the state level. Oregon has led the way.
Posted by: timblackcpa | January 19, 2013 8:19 AM
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I work in Oregon as a Licensed Tax Consultant and have to get an education and take tests designed to make sure that I have the knowledge and education to do a tax return correctly. I agree that IRS should not regulate the process but it should be up to the individual state. Oregon has very tough rules and regulations regarding their tax professionals and are very well monitored by a state board on catching preparers that are doing fraudulent returns, or having suspicious practices before the IRS.
I agree IRS should not be doing this regulation but it should be up to the State.
Posted by: topmom1953 | January 19, 2013 7:41 AM
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If those three tax preparers who brought this lawsuit were honest tax preparers, they would not be trying to get out of taking the competency exam or the required continuing education. It seems to me that honest tax preparers would see the benefits of the RTRP requirements and registration. I don't give a rip that the RTRP requirements may put some tax preparers out of business. The ones who are forced out of business are the ones who refuse to be subjected to IRS scrutiny. These are the ones who give the honest tax preparers a black eye, and cause the honest tax preparers to be subjected to even more scrutiny by the IRS and possible sanctions, fines, penalties, etc.
If you are an honest tax preparer, the RTRP requirements should make you feel more secure. The RTRP requirements are there to make us all better tax preparers (through the required CPE), not to cause us to close our businesses. If we, as tax preparers, are not willing to take the required education, how can we know the changes in tax law from one year to the next?
I take a minimum of 48 hours of tax law CPE every year, and more often than not, I feel this is not enough education to properly cover the number of changes being made every year in tax law.
I agree with many of the comments made regarding this lawsuit. It is an insult to those who have taken and passed the exam and who have taken the required 15 hours of CPE. The RTRP credential can only help to enhance our (tax preparer) credibility.
Posted by: mastertype | January 19, 2013 7:37 AM
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To my belief if irs does good job while they audit, they can stop the fraudulent preparers. Thousands of pages of irs legislation are there and sometime it is hard to remember all of them, but I am not saying that irs should stop, no-way, they should introduce a strict 8867 so that after reading a tax preparer should think twice that either by doing wrong, he / she is going to jail or be punished atleast $5000/-. If irs punish just a few, believe me 90% of crooks will run-away. Especially, in the case of eic, charity / donations etc. etc. I have seen a person who brought his tax penalty letter received from irs and on my asking he showed me his tax return, exactly I do not remember, but believe me, the deduction was more than 55% of the agi, and without any documentary proof. It was in 2009. So, I did advise him to pay the tax+ penalty and not to do it again. Now, if the tax preparer would have been arressted and been given at-least 1 year of jail time and his picture would have been shown on media and print-media, thousands of tax preparers would have taken more caution, if they are relaxed. It is easy to stop, but depends on irs, how do they want to do.
Posted by: khanswali | January 19, 2013 7:32 AM
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I feel that this was a bad call by the judge. I've seen so many bad preparers. What's wrong with requiring education and testing. Those who take their job seriously do learn the new laws and try to do the best job. This is one of the only professions that now you don't need any education or training to start being a tax preparer. Just hang out a sign every tax season, and poof your in business. Tax preparer here ,no guarantee ill do a good job because the idiot that uses cheap tax preparers who are bad don't know anything about the tax return any way. They just want a refund whether the return is right or not. I'm not say all preparers are bad but there are many. Testing an PTIN numbers are a way of making this a better profession. Would you go to a dr dds lawyer accountant without any required training?
Lets see tomorrow ill be a doctor and charge $85 every 5 min. Removal of a splinter $995 If all else fails ill get a job at H and R Block and over charge people
Posted by: Alan93 | January 19, 2013 6:43 AM
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This is very unfortunate; there are many preparers who should not be preparing tax returns. This helped to elelimnate some and train some. The public will suffer from this decision.
Posted by: redinked | January 19, 2013 5:17 AM
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Typical IRS/government tyranny! You hear complaints from the government about incompetent tax return preparers, but NEVER is there any push to lessen the complexity of the tax laws. NOBODY in the IRS knows the entire tax code, but the IRS expects everybody who prepares tax returns to know the entire code! Each and every year, the government adds more and more and more regulations and law. The morons in the congress don't even do their own tax returns. The whole system is rigged uncomprehensible language everywhere you turn!
Posted by: gmoney | January 19, 2013 1:15 AM
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Just because people are registered or CPA's r lawyers or EA's doesn't mean they will follow all regulations if they feel something is inconvenient. I have been at seminars listening to their complaints about electronic filing, for exampler, and hearing these so called examples of above reproach respect for regulations suggest to people that they designate all returns as non paid preparer. Is this an example of just how these people are so concerned and listen to them trying to defend this. Recently I had a person come in and when working through the return saw that the marriage penalty was about $10,000 (he was coming to me after using a CPA firm for years) and I simply said to him I'm sorry, I can't do this return. When I related the story to some of these cpa, ea or lawyer types, how many told me I was crazy not to do the return and should have done it as a non paid preparer.
Posted by: JEFFJAGUAR | January 19, 2013 12:45 AM
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While I would expect the IRS to acquiesce. I hope congress is paying attention and acts on this issue. One of the several reasons why the IRS is back logged is due to tax preparers who don't know what they're doing.
Posted by: taxguy94612 | January 19, 2013 12:10 AM
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This is a great victory against the IRS anarchy! Why? Because we are 320,000 Tax Return Preparers but only EAs, CPA, and Lawyers are no required to can get hired by Intuiet! as counselor of tax tenchnician! and me as Registered Tax Return Preparer , I am not on that list to get hired by that company! and the IRS Authority requires us to be registered, continuing the educacion and be test on their rquirementst? Tha i Awful becaue, we are the ones that dont going to be hired by intuirt? Buet for the IRS athority we must have everything to be done before Dec 31,2013!
Posted by: raguilar0419 | January 18, 2013 11:45 PM
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It's obvious that Title 26 must be scrapped, and the 16th Amendment revoked. The IRC is unworkable and represents a cruel and unusual punishment to both it's administrators and taxpayers. We got along fine before 1913. The tax code is a web of special breaks for special interests, and ends up being unfair to almost everyone, a law of plunder ala Frederic Bastiat. Chalk it up to a bad experiment, like prohibition. Think about how you could help your clients make money!
Posted by: MikeCPA | January 18, 2013 11:45 PM
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I have been preparing tax returns in Oregon for over 20 years, and have had harder regulations than those set up by the IRS. We are proud of the fact that we are among the most trusted of preparers and that the IRS used our plan as a template for theirs. In the long run, it will ensure that the preparers of the US will be better trained, making the IRS's job easier. Yes, it does cost money, and it does step on preparer's toes, but it does make for a better work force.
Posted by: annebaughman | January 18, 2013 11:36 PM
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I received an email that said refunds would be delayed because congress wants to stop the billions of dollars being paid on fraudulent returns. If congress wants things to change then they should give IRS the authority it needs to do the job. Identity theft and fraud is running rampant and it is partly because of inexperienced and/or fraudulent preparers. IRS SHOULD raise the bar when it comes to professional tax preparers education and ability to do their job. I personally question why some of the people have a problem with testing and continuing education.
Posted by: LADYTAX | January 18, 2013 11:02 PM
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The concept of the RTRP was to require training and continuing education for those prepare income tax returns. This incredible defeat was in fact a win for the fraudulent and the unqualified preparer, as they will no longer be required to play by the rules.
Congratulations to the imbacile judge who decided this case.
Under the RTRP program, there was a requirement for annual ethics training, which directs the behavior of a preparer in the preparation of income tax returns. Again, without ethical guidance, there is a clear opportunity for fraudulent and improper behavior before the IRS.
Posted by: Gary Hancock | January 18, 2013 10:42 PM
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Anyone with a true passion for this field has been "playing by the rules," from the beginning. Carrying insurance, educating ourselves, and helping the best interests of our clients, within the rules that the IRS has set forth. As well, I have only dealt with returns that I feel competent to do, and have not been afraid to have a client seek another professional if I feel it is beyond my scope of knowledge.
I am not necessarily against the RTRP testing and continuing education, and have completed the 15 hrs., and passed the RTRP in October, 2012, and gained more knowledge along the way.
What the IRS negated to act upon is, there are people out there "preparing" returns for compensation, and never signing a return. Or, there are "signing preparers" who shouldn't be trusted with a coloring book. These are the people that have created the issue that is at hand now, and some of which, I'm sure the IRS is already aware of. Is it fair to put all of us on the same level with those that don't care and will circumvent any rules to begin with?
Posted by: taxgirl370 | January 18, 2013 10:34 PM
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Wow! It is a small step of justice for the small guy against the juggernaut of the Compliance Complex and all those BIG guys that suckle off the regulatory teat! Now, can the IRS ignore this like they ignore Nina Olson TADs and reports to Congress?
Now maybe they can reign in the statutory power assertions of the IRS related to FATCA IGAs and bulletin 2012-20 creating a DATCA lite on their way to a full blown version of FATCA on domestic shores.
Posted by: Just Me | January 18, 2013 9:10 PM
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While I went through this charade, I might have known this push for more revenue would ultimately go up in smoke. However, in response to one of the comments here, I just don't get why any tax preparer would be opposed to e-filing. It saves oodles and oodls of work for such things as putting tax returns together, attaching W2's, in some cases preparing two state returns.
Yes I understand once upon a time there was a feeling among tax preparers that you didn't want to assist the IRS in more efficiently processing tax returns as this would lead to more availability of funding for audits. But in this day and age, the returns that stick out are the paper returns where somebody has to key punch the information and perhaps is under an obligation to report certain things to his or her supervisors. In many cases today, I don't even have to print any tax returns. I prepare the return, e-mail the cmpleted returns and ask the client to return the signed authorization forms. Not a single piece of paper. My copy is the pdf file I send to the client. I just don't see why anybody would want to sit and print multiple copies of returns, sort thej, attach W2's and when the client complains, re-do the process. The client finds an error, no problem. Just fix it and re e-mail it or if they don't use e-mail, mail 1 copy waiting for the autorization. I wouldn't dream of going back to the 20th century to file returns on paper. And with 95% of the returns coming in electromicaslly, the ones getting the closer inspections are the archaic paper returns.
JMHO
Posted by: JEFFJAGUAR | January 18, 2013 8:40 PM
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JAsher and Steven L .... I am one of those Preparer that felt the new regulations were not designed to benefit the public but to create another layer of bureaucratic incompetency at the IRS. Having practiced for over 35 years - small business less than 100 clients - I always update my education of my own choice, I take courses in the area where I deal with and try to be very careful in researching every tax return; that is the reason I have such a small practice. Steven L. .. the knowledge you acquired is not wasted and the test you took gave you more confidence in your ability. It was an insult to me that I am forced into electronic filing and other regulations that have no value. I had decided to retire, but now I might reconsider. I have not renewed my PTIN which I had since that was offered instead of using my SS number. I did not renew it because I did not take the test although I continued to take seminars and video programs. I NEVER filed any Tax Returns; I prepared them and gave them to my clients to take home - sign and mail. Will be interesting to follow the issue and see what the outcome will be.
Posted by: Mast_48 | January 18, 2013 8:15 PM
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While this ruling provides injunctive relief for very small practices, it fails to solve an over all problem of providing accountability and minimum competency generally. Based on my reading of the decision it is unlikely IRS will appeal.
It seems more likely they will seek a legislative solution through Congress which may prove to be more expensive and burdensome than the apparatus that was in place under the guise of Circular 230. Regardless, IRS now has been put on notice that over reaching by using regulation over law is not a path they want to go down. That is good news for everyone, and other agencies should take notice. This could be the beginning of a sea change in Washington D.C. and for that we can all be grateful.
Posted by: chrisfilby | January 18, 2013 8:12 PM
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The IRS could put all unregistered tax preparers out of business easily: it could focus its auditing efforts on their tax returns, and make a public announcement to that effect. That would scare their clients to registered tax preparers!
Posted by: briggsie | January 18, 2013 8:05 PM
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Seems to me that tax preparers would want to certify that they're qualified to file taxes for others.
Perhaps the IRS doesn't have the statutory authority to require credentials, but it's certainly logical that it should.
Posted by: JAscher | January 18, 2013 8:00 PM
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This ruling is an insult to all tax preparers who passed the IRS exam and took the required CPE credits
Posted by: Steven L | January 18, 2013 7:42 PM
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