Reactions among tax preparers to Friday’s court decision striking down the legality of the IRS RTRP mandate ranged from relief to recognition that the tax prep industry needs standards. But a survey of various tax prep-related groups on LinkedIn shows that the decision mostly raised questions.
“Is this the end of the RTRP?” one member wondered on the Tax Business Owners of America board. “Does this mean Circular 230 is invalid?” wrote another. “Can I get a refund on my test fee?” wrote a third. “I’m guessing no.”
Some preparers voiced satisfaction that they waited to book their test, which was recently considered a risk since testing centers were expected to experience severe logjams of procrastinating preparers later this year. Preparers who supported the idea of tax prep standards voiced dissatisfaction with the court’s decision (“a disgraceful interpretation,” according to one) but also said that how the IRS has gone about the regulation mandate was “not the best,” focusing what they saw as too much attention and public-awareness work on the RTRP designation initiative and not enough on promoting the EA designation.
Others questioned details of the decision. A preparer on the National Association of Tax Professionals board noted that the argument is over the definition of "practice." The IRS has the authority to regulate "practice before the IRS." The IRS has interpreted return preparation as practice, and the plaintiffs believe it is not part of practice.
Preparers also wondered about the IRS reaction to the unexpected decision, some guessing that if the IRS loses an appeal to the decision, “Everyone [who] doesn’t fall in line with what the IRS wants will be audited right out of business.” Few predicted the regulations would simply disappear.
Charles McCabe, CEO of the Income Tax School and Peoples Income Tax in Glen Allen, Va., predicted that the IRS would appeal “and, if necessary, obtain authority from Congress to continue the preparer regulations.”
“I've read that the IRS may also seek an injunction to continue the regulations during the appeal process. The vast majority of reputable tax professionals support preparer regulation, as do most taxpayer protection advocates. The IRS is also deriving substantial revenue from the regulations and I think the U.S. Treasury will not want to see those funds go away and see the IRS holding the bag for the huge investment it has made in developing the regulations,” McCabe added. Other preparers predicted major lobbying by the national prep chains -- and perhaps CPA organizations as well -- to stall any authorization from Congress. Others ventured that the IRS might continue the RTRP program on a voluntary basis.
“If the requirement is reborn, either through appeal or new legislation, what will be the status of those who have taken and passed the test?” one preparer wondered. “Will they retain their designation or have to start over again? Likewise, what will those who have not taken the test yet have to face? Will it be essentially the same test or will those folks be held to a different, perhaps higher, standard?”
“What it will mean in the long run,” wrote a preparer, “remains to be seen.”
47 Comments
TAX PRPARERS ARE OVER REGULATED. I'M IN CA AND THE CONTINUING EDUCATION REQUIREMENTS ARE A JOKE. I HAVE BEEN DOING THIS FOR OVER THIRTY YEARS AND HAVE PAID CA EVER SINCE IT STARTED ITS REGULATION. TRIED TO REPORT A FRAUDULENT PREPARER ONCE AND CTEC AND FTB WEREN'T INTERESTED. NOW HAVE ALSO PAID IRS THREE TIMES. WHAT DO I GET? AUDIT NOTICES TO CLIENTS DURING TAX SEASON. WHY CAN'T AUDITS BE DONE AT TIMES OTHER THAN FEB 1 TO APR 15? WHATS THE HURRY AFTER ONE AND A HALF YEARS? $185 PASSED ON TO TO CLIENT FEES. THE GOVERNMENT NEEDS TO QUIT BABY SITTING PEOPLE AND MAKE THEM RESPONSIBLE FOR THEMSELVES. IF THEY CAN'T PICK A TAX PREPARER I DON'T REALLY WANT THEM AS A CLIENT. I WOULD PREFER TO DEAL WITH INTELLIGENT PEOPLE. I WOULD PREFER NOT TO DEAL WITH THE GOVERNMENT TELLING HOW I CAN MAKE A LIVING. YES I MAKE MISTAKES. I DO MY BEST TO FIX THEM. I USUALLY HAVE TO TELL THE CLIENT WHEN I SPOT IT NEXT YEAR. REGULATORS GO AWAY NOW!
Posted by: MARK1951 | February 2, 2013 9:56 AM
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Good & Bad
Good because it will only delay those (like myself) who hadn't taken and passed the exam a little more time to do so. I went to the IRS website and the PTIN information is DOWN and I wanted to schedule my appointment as soon as the tax season got underway.
Bad because the IRS (knowing they over step their power) is only going to go to Congress and get the permission they need to regulate the tax industry.
It's only a delay as with the tax season in and of it self.
Posted by: Bmore | January 27, 2013 11:51 AM
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I am impressed with all of you. And very impressed about the simple fact that we all have passion on this issue.
I agree with education/testing to keep our industry clean. I agree with Skipper50 I agree with Dob502 I agree with Oktaxcpa
You are all hitting on the issues. You are all attempting to write and make a point that when put to print can be misinterpreted. The "intent" is clearly understood and for the most part I agree.
I do not want to regulate the taxpayer. I do not want to take the "hit" because I am lied to - even to my face.
I do want to see the blame for the real issue go to the direction it should - the IRS and the employees and the "god" computer authority.
I am tired of dealing with idiots. I am tired of wasting my time on hold for hours. I am tired of writing 3 and 4 times to resolve issues from computer generated thoughts. I am tired of being told by IRS employees "Well - I don't know how or where this is coming from.....BUT THE COMPUTER SAYS"
Enough of this between us - let's get to the root of the problem Congress - budget cuts - lack of funding to the needed areas of improvement within the IRS - EDUCATION to the IRS employees.
We all want what is right - and what is right is fixing the IRS
Posted by: Lenore | January 25, 2013 10:26 AM
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All I can add is that I have seen some very good comments, some angry comments, and many stupid ones. And if you read your own comments honestly, you'll be able to categorize it.
Posted by: tego@verizon.net | January 25, 2013 1:07 AM
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I am truly dissappointed with comments by Ann Lafoe regarding CPA's. Ms. LaFoe I am a CPA and your comments are offensive. I do not go around harping on EA's or PA who have screwed up returns as you appear to do regarding CPA's. I do my CPE in one year than you ever thought about doing and most of it is on taxes. But unlike you, I have made mistakes and I will admit I am human and make a mistake. What you are missing here is the fact that thousands of preparers out there are doing returns who have no training and no continuing education. But I tell you what Ms LaFoe, I will be glad to this this test if you will agree to take the CPA exam. There are many good EA's and PA's who have extensive experience in taxes and tax law with whom I greatly respect. But there are also many CPA's in that same category. There are lousy CPA's, EA's & PA's out there. You might be a much better person if you would get off your soapbox and stick to preparing taxes.
Posted by: Conrada | January 24, 2013 10:32 PM
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It seems pretty simple from the comments that those who would benefit from these regulations support them and those who would suffer do not. This was all manufactured to seize control of the tax prep industry. First they changed the definition and interpretation of practice and then said Hey,those preparers are practicing so we can regulate them. Now they'll be working for us and the taxpayer will pay them. Many firms saw a huge economic opportunity to grab the millions of displaced taxpayers who would need to get their taxes done. I always like to blame someone else to divert attention from my shortcomings. If I can get you to focus on the distraction the real problem seems to goes away. Tax preparers are the problem, guns are the problem, Republicans are the problem, carbon emissions are the problem, teachers are the problem with education, unequal results for everyone is the problem, and most of all not enough government is the problem. What we need to do is confiscate all the wealth that exists and split it up evenly so everyone will have the same opportunity. All we have to do is freeze everyones retirement plan, savings accounts etc., then give everyone a check from the income proceeds. We could call it "Life Security". This will allow the government to borrow from these funds to support new programs that help more people. Man, does that ever sound good. I'm surprised none have you have come up with the idea. But first we must control those problem areas with new regulations, after all we have legislators, have them make new laws that allow regulators to make laws and save time. Finally you are realizing that government taking control of your lives and liberties is the way to go. Good luck
Posted by: hisexcellency | January 24, 2013 9:48 AM
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Dob502,
I respectfully submit that you did not completely read (or let it sink in) my entire post before you judged me:
"Earlier on 1/23/13, in a post by oktaxcpa, the following comment was made: "Where are the mass comments about cleaning up non-licensed tax practiioners, EAs, etc?"
That comment by oktaxcpa, as well as the rest of his/her posting, I take to be an attack on the smaller tax firm & sole proprietorships, as being the primary source of problems in the tax collection system to the USA."
Prior to my first posting, many were jumping on CPA's and labeling them as INCOMPETENT. Not many CPA's had posted a comment yet. I took up the defense for the COMPETENT CPA's and, further, rebutted/agreed that we also have to deal with the incompetent CPA's and non-CPA's. My "attack" is SOLELY on the incompetent preparers of ANY designation--which in all reality may not have even read this article, smh! Please read it again, and more carefully this time. If you still feel the same, we'll agree to disagree like gentlemen.
I work at a firm of 20 people, of which only 7 of us are CPAs. Those who are not CPA's are admin staff and tax preparers. Our firm takes our responsibilities to our clients, to the public, to our state, and to the federal government very seriously. Some firms have more or less than that in their headcount dynamics. I happen to agree that some of the "big firms" do take too much for granted and throw their weight around (from my experience at working at two of them)...BUT, I do have friendships with some people who are still at those "big firms" whom I know are ethical and trustworthy, and they are doing the best they can not be influenced by the ones who can't say the same. It's not the SIZE of the firm, but the competency employed therein.
Look, Dob502, you sound like you have respectable credentials as do a lot of others on here. If this is the case, we have nothing to fear and nothing to lose by being tested. People, this is NOT the CPA's vs the non-CPAs. This is the competent vs. the incompetent and the fraudsters. CPA's and non-CPAs could fit in either of those two categories.
This is also about a judge who took the time to read the laws and interpret them according to specific facts related to the IRS case. Although I have not read the entire case and the opinion yet, the facts the judge had in front of him are what the opinion was based on. So even though I personally think testing is appropriate, I think it will have to be resolved in a different tack than the one the IRS initially took. I just hope it's within my children's lifetime :) And yeah, the refund of the registration fee WOULD be nice.
Posted by: oktaxcpa | January 23, 2013 7:21 PM
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I started helping with taxes at the age of 15 in 1963 in my mothers tax business. I have no problem with taking the RTRP test and was ready to schedule it. I am also in favor of the education requirements. In Calif. we already must have 20 hours Continuing Education and I actually do 30 - 40 hours a year. I feel keeping up to date is very important. But, after over 30 years of preparing taxes, IRS has information on my preperation skills. I am an associate member of the CSEA and attend meetings regularly along with my education requirements. If I need to take a test, then I will.
I am also a full charge bookkeeper and do small business bookkeeping year round. But, I know there are people who abuse the system. Will this help? Maybe....those who are dishonest will always find a way to be dishonest!
Posted by: LindaL | January 23, 2013 5:54 PM
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I have been doing taxes in CA for 35 years AND CA has always required Licensing and now registration with CE and Fee's. I think the IRS felt that IF other states would not do what CA has always done, then the IRS would require what CA has always done!! SO, CE, fee's and license is NOT new to us.
Posted by: DENNISLM | January 23, 2013 5:20 PM
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What everyone is forgetting... is some of the tax preparers are honest but its the clients that sit there and lie through their teeth. I have had clients come in and have no clue when the dependents birthday is. As we all know it the EIC program that causes a lot of problems. Its people selling their children to others. I don't this its a problem that tax preparers are making mistakes on the returns, if some how Social Services and the IRS should be linked together. If a child or children receive Food Stamps from one person but the John Doe claims them on their taxes saying they support them, we as tax payers are paying both ways. I am not saying take EIC away, just it should be another way of stopping people from selling their kids information. I don't know what percent of the bad returns this includes but I am sure its a lot. I ask my people to show proof the child lives with them, if its a new client. Not just taking someones word for it.
Posted by: barbie320 | January 23, 2013 12:33 PM
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In addition, I respectfully submit that this "blunder bus" effort to over regulate all small tax preparers, is yet another smoke screen to cover up the MAJOR IRS failure in the area of 1. tax identity theft and 2. electronic filed tax return fraud. This is also in part a political failure of our politicians who have unwisely pushed the IRS to make "quick refunds" to curry favor with voters.
Check out the January 13, 2013 article from the Wall Street Journal, from which I quote: "Tax-identity theft exploded to more than 1.1 million cases in 2011 from 51,700 in 2008. The Treasury Inspector General for Tax Administration last summer reported discovering an additional 1.5 million fraudulent returns totaling in excess o $5.2 billion."
Several comments made in response to such article, point out several basic steps the IRS could have taken, but have unexplicably failed to take so far, in order to stop this scandal.
Again, the IRS has plenty of house to clean up in their own back yard, without attempting to impose a "blunder bus" regulation on all small tax return preparers.
Posted by: Dob502 | January 23, 2013 12:33 PM
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Whine Whine Whine. Some of you, anyway. I took the test and passed it way back last year. Sure I had to study a bit. A good review is all that was needed. The test wasn't that hard. Maybe because I have been doing taxes competently for many years. In the course of a year I fix a lot of problems done by the person, who by buying Turbo Tax (or similar) from Office Depot, is now a "tax preparer". Illegal to require an RTRP certificate? Maybe. So what? If you can't pass the test you should really doubt your competency. There are some licensed CPA's out there who would do good to take the test also. We need to clean house to get rid of the "preparers" who can't do it right. DEM
Posted by: Oldgolfer | January 23, 2013 12:31 PM
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I feel six and one-half dozen about this ruling. I understand the need for regulation but never thought RTRP was going to do a damned thing. It's a one time test and from what I heard wasn't even that hard. I agree that people who were long-standing preparers should have been grandfathered into this situation. They should have come up with some sort of ruling/formula for that and not expected people who've been in the business for 20 or 40 years to take time out for this. On the other hand, if you've been in business that long what's the big deal? Instead of creating all this drama why didn't they rule that RTRP was the requirement for NEW preparers and leave everyone else alone? If the IRS doesn't have the manpower to shut down all frauds and incompetents, what's to stop anyone from hanging out a fake shingle single declaring himself Joe Blow, RTRP?
By the same token, no matter what your designation you can be highly competent or incompetent. I'm an EA, been in practice for seven years and have cleaned up the mistakes of CPAs both past and not past their sell-by date and people posing as preparers.
Posted by: andystaxes | January 23, 2013 12:13 PM
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In response to Tim Black CPA:
The "free pass" that I intended my comments to illustrate, dealt with (for example) CPAs who passed the CPA say 15 years ago, and in that 15 years have primarily (if not totally) practiced in some area other than tax, and just as importantly met their annual CPE requirements with courses largely, if not totally, in areas other than tax.
Fast forward to today, and I can point to some such CPA's now starting to prepare taxes. Yet because of their CPA certificate earned years back, and with no guarantee that their past annual CPE resulted in them maintaining any adequate proficiency in tax, these CPAs end up getting to what I respectfully submit is a "free pass".
Posted by: Dob502 | January 23, 2013 11:55 AM
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Again, I am a practicing CPA with 43 years in tax, plus 30 years under my belt of passing the Peer Review process every 3 years, with respect to my service offered of audited and reviewed financial statements.
Earlier on 1/23/13, in a post by oktaxcpa, the following comment was made: "Where are the mass comments about cleaning up non-licensed tax practiioners, EAs, etc?"
That comment by oktaxcpa, as well as the rest of his/her posting, I take to be an attack on the smaller tax firm & sole proprietorships, as being the primary source of problems in the tax collection system to the USA.
However, I respectfully submit that it is instructive to compare the proposed regulation of tax services, to steps taken in past decades to impose the PEER REVEIW process to regulate the financial statement preparation sector. When I was younger, I bought into (supported) the primary argument set forth in support of PEER REVIEW I.e. it was necessary to clean up non-licensed (and/or substandard) preparers of financial statements (in essence overwhelmingly the small firms/ sole practitioners) (i.e. an argument very similar to that set forth by oktaxcpa (and others)to increase tax regulations on tax preparers).
Again, the focus of such assertion (over PEER REVIEW) at that time was not on the larger CPA firms - it was arrogantly assumed that the big CPA firms were no threat, and that the smaller operators needed to be cleaned up.
But as I look back on what has happened over the decades, the GREATEST DAMAGE to our financial system has come from the large CPA firms, with Enron/Arthur Anderson being a prime example.
So based on such past history, I submit that it is reasonable to conclude that this recent attempt to clean up on all the smaller tax preparers (whether CPAs or otherwise) is similarly misguided. It is a smoke screen, aided and abetted by the large firms, to divert attention away from themselves. Yet if there is any big scandal that is going to arise in the tax preparation area, I predict that any such scandal involving tax preparation is going to come from the big CPA firms, just as it did in the financial statement sector (i.e. Enron/Arthur Anderson).
I respectfully submit that this is reasonable basis for being pleased with recent court case loss by IRS, and win by the small firm /sole proprietor tax preparers.
Posted by: Dob502 | January 23, 2013 11:44 AM
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Hey DOB502, CPA "free pass"? I'm surprised you feel that way. I don't know what CPA exam you took, but my 2 1/2 day exam tested me on taxation. It wasn't a cake walk either. I was tested on individual, partnership, and corporation taxation as well as the related tax law. Most didn't pass this on the first (or more) try. And what about the 40 hr/year CPE requirement which included some taxation? "Free pass" my eye!
Posted by: timblackcpa | January 23, 2013 11:29 AM
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I have taken & passed the RTRP test. I have also completed my 15 hrs CE. I also wonder if the IRS will send my certificate. I agree some type of regulations are necessary to control fraud.
Posted by: stevex12 | January 23, 2013 11:24 AM
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I'm all for regulation, testing, and CPE for tax preparers too - but I think that the judge made the right call. The issue here isn't whether this is a good thing or a bad thing, but whether the IRS had the authority under law to do what they did. And even under the broadest possible deference to the regulatory authority of the agency, I don't see how one can claim that tax preparers practice before the IRS.
If we want regulation of tax preparers, the proper way to get it is to have Congress pass a law that gives the IRS the authority to regulate preparers even if they don't practice before the IRS. And as other articles on the subject have noted, Congress hasn't been willing to do that.
Posted by: MWEinNC | January 23, 2013 10:41 AM
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Regardless of what we think about regulation, we all should be refunded our registration fees for the last two years since they were collected illegally.
Posted by: volzcpa | January 23, 2013 10:25 AM
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Oregon requires annual licensing. CA requires annual registration. Both are contingent upon annual CPE requirements.
I'm all for testing and registration and I think it should apply to any preparer. And no I don't think the education requirements are too strict. If someone can't find the time to complete 15 hours of education they shouldn't be doing taxes. I do resent the fact that we now have to pay for PTINs which we had for years. I also resent the fact that living in a rural area, I had to travel 3 hours 1 way to take the RTRP test and pay for it. My education requirement for CA exceeds the IRS requirement and should suffice.
Posted by: tilt53 | January 23, 2013 10:22 AM
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I am a CPA and have been preparing returns since 1986. I would like to respond to those making negative comments about having to go in and fix prior CPA's "messes" for their clients--it would seem you are dumping on CPAs in general. Where are the mass comments about cleaning up non-licensed tax practiioners, EAs, etc? I think it is because the majority of CPAs aren't stooping to your level to be as insulting. Please take no offense--I am in agreement with some of your statements, but give us ethical CPAs the credit we deserve, too.
Let me make it clear. The CPA designation covers a multitude of areas--tax, audit of financials, compilations, opinions, litigation support, management consulting, fraud detection, valuations, etc, etc. The world we are involved in consists of years and years of specialized (expensive) training, passing a rigorous (expensive) exam (that has time and again been deemed more difficult than passing a lawyer's bar exam), yearly (expensive) continuing education requirements, and reporting annually (expensive) to our state accountancy board. Because of this, CPAs are somewhat forced to specialize in one of the above areas.
Stay with me here, it get's better.
I specialize in tax, and because of the complexity of the code and regs, I am forced to further specialize in particular areas of tax--example, my areas are oil and gas, partnerships, fixed asset management, and tax research. Tax research can require hours and hours of digging through case law, code and regs, etc, and having decent writing skills. Further, because of my specialities, others in our firm specialize in their own areas of expertise so that we can serve a very broad base of clientele.
That said, a CPA and CPA firm that follows Circular 230 and the regulations addressing preparer penalties, is going to give you their most ethical and competent services. If it is out of one CPA's area of specialization, they are going to ensure a client's return is in the hands of a CPA who does have that expertise. There are at times preparers who do not yet have their CPA designation, but their work must be reviewed by a CPA.
In an ethical tax practice (whether it be in-house or a public CPA firm, there should ALWAYS be a second pair of eyes reviewing that return for anything from the tiniest mistake to the giant gaffe, no matter WHO prepared it. In the best of circumstances, there should be a third person who actually signs the return AFTER he/she has looked to make sure where the preparer and reviewer were digging in amongst the trees, the signer can look at the forest level and make sure the whole thing makes sense.
In reality, there ARE CPA's who have gotten the designation so they can hang out a shingle, think they'll make big bucks, and then not give a flip about comprehending and staying current on the tax law. I do run across those and I myself have cleaned up their messes, too. And I have cleaned up just as many messes made by EA's and unlicensed preparers. Makes me want to kick their butts--ALL of them!
It's important to have the tax profession regulated, just as it is to have the medical profession regulated. Given the horror stories you may or may not have read below, any one who does not take seriously the charge you have of handling your client's FINANCIAL life with due care, is as dangerous as a doctor who does not know what he/she is doing. Your client's finances and physical health is your client's future and legacy to their family.
Should CPAs, attorneys, etc. be required to pass a test by the IRS? I think yes. Whether or not they're doing tax every single day, some of them are in that "hang out my shingle for dollars" category. How is anyone going to know which ones those are unless we all pass the test?
One last thing. The way some of you posting on here have used grammar, punctuation (or lack thereof) and spelling, would not give me confidence that you are competent to prepare my return, research complex issues, and/or attach statements to my return. Just saying.
Posted by: oktaxcpa | January 23, 2013 10:19 AM
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Who're they kidding. This bald-faced power grab by the IRS is not about competence, it's simply about trade restriction, driving out the independents and moving that business to the big guys.
Posted by: Skipper50 | January 23, 2013 10:05 AM
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The annual PIN fee renewal system also needs to go. No state licensing requires annual renewal. IRS resources should be spent on tax law matters and not on the state function of licensing. This court decision was a victory for taxpayers who now have preparers who can stand up to the IRS on their behalf. The PIN system in place before was adequate. The new fee and licensing system was overregulation by the Obama administration, killing jobs and swinging back the pendulum with power for the IRS whose excesses were restrained in the Taxpayer Bill of Rights.
Posted by: ProTP | January 22, 2013 11:50 PM
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I am a retired EA. I have worked in the profession since 1966. I welcome the ruling only because the government has become to hungry for power. If it does not have legal authority then we must not let them take that authority regardless of what we feel or think. I read the original article and the posts and disagree with those that feel the IRS should have won. The court ruled correctly. Enough said. Just because you took your test is no reason to allow and already out-of-control agency to have a power grab. I suppose you probably feel it is OK to trash the Constitution as well. I agree with CE and most of us do it anyway just to know what's going on and is new. I agree with testing and obtained my EA by testing. What's the big deal. But if one has been in business for years and is not a problem to the IRS then the heck with exam requirements. Let's put people to work not cause more lost jobs!!! When the Treasury employs tax cheat Geitner as its leader, its time they stop harrassing the little guy.
Posted by: Skyroamer | January 22, 2013 9:19 PM
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Make the test online and free. Also show which area candidate failed.No need to spend on legal fees to appeal. IRS should care about small preparer who are preparing returns with only W-2s income.
Posted by: rajendra | January 22, 2013 7:10 PM
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My issue is with the fact this is another Federal Government intrusion into Small Business as we've frequently witnessed. This should be a state licensing issue (as is with CPAs, attorneys, etc). They could certainly use the income and could be more directly involved in ridding their state of fraud. I'm like others who once had a full-time Tax Prep business but now find in our semi-retirement years that we maintain a small practice (pickup-delivery type) and find the RTRP to be too intrusive. My competency is maintained daily through a variety of educational methods so CPE is not an issue. However, after 25 years I should have some level of grandfathering. I feel this is another method for the government to invade my privacy and that of my clients. If the IRS had more effective technology (data mining, cross referencing)they could eliminate any tax return fraud. Just a matter of spending another million a two on the not yet integrated system.
Posted by: sfaubert | January 22, 2013 7:01 PM
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After 40 years in practice as a CPA, I figure I'm competent to prepare most tax returns, except in areas I'm not competent to prepare returns, and then I don't.
I think the attempt by the IRS was a well-intentioned idea to corral those among the preparers that don't share the same education, values and ethics that others of us do. Those that feel the need to think that this is another left wing conspiracy should probably take a look at their life and decide if they have one. This was an attempt to raise the bar of professionalism in the ever increasing complexity of understanding the tax laws, but so many here seem to enjoy things the way they are.
If they lose this on appeal, I would definitely see the Service going to Congress for assistance. Just like the Dr. Soliman case, where the IRS clearly overstepped its brain power is disallowing the good doctor his home office deduction, Congress simply rewrote the law so he could properly receive his deduction, along with most all of you that claim home office deductions as well.
Yep, I've come across returns prepared by others that have contained some pretty gross errors. A couple by CPA's. But most war stories that some here would like to share were not done by those that generally must comply with an average 40 hours continuing education annually. It doesn't make them necessarily any smarter, only possibly better trained. They were done by solo folks that don't leave much in the way of footprints, or tax return mills, or just plain thieves out to get you.
Posted by: topbeancounter | January 22, 2013 6:12 PM
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I am a CPA with 43 years experience in tax, still practicing, and I wholeheartedly agree with the court decision.
I viewed this attempt by the IRS (to force preparers to register and take CPE) as only part of their overall attempt to shift the burden of tax compliance onto the backs of all tax practitioners- i.e. to make public tax preparers an extension of the IRS.
I also viewed the exemption for CPA's as being wrong, because I know plenty of CPA's who know very little about tax - such as they operate primarily in some other area of the CPA practice world. Yet they tend to get "free ride" because they are a CPA.
On one hand the IRS was trying to make public tax preparer an extension of the IRS, but on the other hand the IRS has drastically reduced the level of training and experience for their examination agents. The way the IRS "shoots first" and "asks questions later" these days with their largely computerized system of sending out notices, really upsets me. Yet they do that because they have adopted a philosophy that because computers can check more things, along with a corresponding change in thinking that they don't need as many highly trained and/or experienced agents as before.
But trying to respond to and workout a response to a computer generated notice is all too often a huge nightmare these days. Gone are the days when it was much easier to get on the phone, talk to an educated, highly trained agent, and get things settled in an efficient manner. Instead today, you have to prepare a large amount of paperwork in response to even mundane matters of difference questioned by the computer. And then you have to hope it is read by someone at the IRS that is educated and experienced enough to reach the right conclusion. All too often, I can tell the the person who reads our response to an IRS notice, is less experienced, and perhaps also more overworked than in past years, and as a result responds to the taxpayer a partially and sometimes totally nonsensical manner (sometimes just to get the matter off their desk - sometimes in sheer incompetence). When we get that garbage response, it is like starting over again - like we have been communication with a stone deaf wall. In my experience, it was much longer these days to convince the IRS of the correctness of the taxpayer's facts or position. Take the time to read the Inspector General reviews of recent years IRS practice, and you will find it supports my comments above.
Posted by: Dob502 | January 22, 2013 5:09 PM
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I am kinda of glad I dont have to take the test, because I was so worry that if I paid all that money then I didnt past, then I wouldnt be able to do what I like doing. I have done my 15 credits I dont mind doing that, I renew my ptin number I dont mine doing that either it was just the test I was so worry about but I am gonna go ahead and do a practice test on it and see what happens. You never know.
Posted by: shelia4749 | January 22, 2013 4:01 PM
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I think most people are missing the point of the decision by the federal judge. My opinion is that the IRS and the government in general has been increasing its authority over our citizens lives for much too long and this is just one example of it.The "rule of law" doesn't matter any longer, just sign an executive order and make it a law, that is their "mindset." If I was in the position of the IRS Commissioner, I would have tested the waters to see if we were on safe grounds before I would have tried to enact all of the procedures for the RPTIN. Our ofice has CPA's and Return Preparers and the Preparers are just as competent for preparing come tax returns as the CPA's. We only hire competent personnel and trust their judgement. In any vocation there will be the "good and bad, the fair and greedy, the honest and the crooks." Our state has an annual 40 hour CPE requirement and must be registered with the State ACCTG. Board.
Posted by: wbron@browncpa.com | January 22, 2013 3:44 PM
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When I first heard of the requirement I felt it was a good idea but didn't like the fact that it was mandatory. However I was willing to comply. I know of a few "preparers" that do not do their clients any favors by filing incorrect tax returns. They don't charge much, but whatever they charge is too much when the people have to have them amended by another tax preparer at an additional cost, or have the IRS charge them penalties and interest for a return filed incorrectly. This is only if it is caught. In the meantime it costs the rest of us because of fraudially claimed EIC. as one example. I felt this requirement would either teach them how to do the taxes correctly or would put them out of business.
I have been doing taxes for 23 years have owned a major franchise for several years of that time and have taught the tax classes several years. I also teach my people the tax laws that effect them so they are keeping proper records. I have done thousands of returns over the years and have had only 2 returns audited which we won both of.
Due to physical problems this last year I have not taken the RTRP test yet, have taken more than required of the CPE requirements and had planned on taking the test right after tax season. The closest place for me to take the test is greater than 125 miles away so it takes more than a day to take it. I have to go a day before the test and stay in a hotel to be able to take the test. My spouse does not want me to go by myself for safety issues as well as my health issues, so they will take time off work for me to take the test. Now I guess I don't need to worry about it at least until it is settled in the appeals court. However, if it becomes voluntary I will be one of the first in line.
If they leave it as voluntary as it should be I agree with DrHoodoo. The RTRP designation shows the taxpayer that their chosen preparer has proven his or her competency in the eyes of the IRS. I do feel as a professional we owe it to the public as well as ourselves. Make the test voluntary and let those who do not want the designation explain why to their clients.
I did and still do object, to the CPAs, being exempt from any requirements. Not all CPAs keep up with the tax laws and I have found errors in prior returns done by some CPAs. I too have said some of my best clients came from CPAs and large firms because of errors in their returns.
Posted by: foxy44 | January 22, 2013 3:41 PM
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I would ask the two commenter's what Obama has to do with the IRS coming up with what they did? I have never seen ant President criticized more than Obama. Are we back to 1860? Just asking!!!!!!
And what the hell is wrong with protecting the public from incompetents, other than the protection of them, for what ever reason(s) some of the commenter's in the thread have?
Posted by: tego@verizon.net | January 22, 2013 3:35 PM
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CPA certainly try to do things honestly. However, CPA have information provided by companies and their accountants. Errors in the report views and most of them is just to avoid paying taxes. QuickBook service can not cope with this. Enter the number of new products in the inventory list with minus-stock minus 45 jars of pickles, etc. Where does a CPA? Who called an external audit to verify that?
Posted by: nadezdamindyuk | January 22, 2013 3:21 PM
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Well, I'm sorry to see this blow up. I thought it was a good idea. I've been preparing taxes plus small business accounting since 1976, as well as getting in 20-30 hours of education per year. I've already taken the test and got my certificate....guess it's not worth much now, huh?
I would certainly like to know why in the world these three preparers took it upon themselves to make such a fuss. I read somewhere they were "libertarians" whatever that means, so I'm guessing they object to practically anything the government does...that about right?
Since the political situation in Washington D.C. is toxic, we won't be seeing any proper legislation soon.
Posted by: MizLiz | January 22, 2013 2:14 PM
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Why would any practitioner resent being licensed? I am not going to rag on unlicensed practitioners, but I don't I agree that doing taxes for x number of years makes one qualified.
CPA's have far more rigorous testing, continuing ed, and licensing hurdles than a "tax preparer", or even a "licensed tax preparer", as do enrolled agents. The expense for a "licensed tax preparer" still would have been far less than for EA's and CPA's.
I am horrified and appalled that the folks who buy TurboTax and the like think that having the software makes one qualified. Licensing is good for the practitioners and the public.
Posted by: taracpa1229 | January 22, 2013 1:55 PM
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I have been doing tax returns for 40 years. Although I go to classes 2-3 times a year, and constantly "read" about the subject, I learned the actual tax-trade 100% "in the street". I have done over 15,000 tax returns, personally over that period of time. Most of my (business) clients pay less than 10% of their Gross Income, in taxes. I have had LESS THAN a dozen audits in all that time.
I do some sort of tax work almost every day! I DO believe that we need "something" in our industry, beyond conventional education, to help preparers understand this idiotic system of taxation we have. But, back when the obam gang first brought this deal of theirs to the table, I called the IRS and asked them about it. They explained it to me. When I mentioned all the "time" I'd had in the game, she seemed to "know" where I was about to go. And she said, "We don't CARE how much time you've had! You have to do this our way."
I was pretty sure, at that point, that deal was doomed! To have the IRS overseeing the training of tax preparers could come to NO good end, for the tax filers! It would be no different than teaching a fox how to guard a chicken house! No matter how much the fox learned about how to do that, things were still gonna be bad for the chickens.
It is my opinion that we preparers need to continually hone our professionalism, on the subject of properly preparing a tax return for someone. As ANY responsible person would, in ANY profession! It is ALSO my opinion that it should be US who decide to do that, NOT the government deciding it FOR us.
We, as tax preparers, should have our CLIENTS' best interest in mind when we do taxes for them. And, I have considered it (partly) MY responsibility to teach them what I have learned...those who would listen...so that they do not have to be fully dependant on me, when it comes to making SURE they pay NOT ONE CENT MORE than necessary in income taxes.
I think this PROVES that obam has NOT fully taken control, yet. I predict that he will face several more "rude awakenings" over the next few months.
You all have a great tax-prep season.
Posted by: the1040co@gmail.com | January 22, 2013 1:44 PM
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Just thought another opinion could shed some light on the IRS proposed RTRP regulation. Although they lost, and I can't say I'm not happy about it, but there is another side to this story. I had the same CPA for 26 years and the last two years he did my taxes he lied to me and said he mailed my return, something he had done for many years. However, I have been in a fight with the IRS for seven years now as a result of the CPA's action. I was not notified by the IRS that anything was wrong for two years...and my CPA passed during this time. His business was sold by the family so it was difficult to get in touch with anyone for months. I owed additional money I didn't know about for two years and it ultimately cost me in excess of $40K, plus because of the IRS actions, lien, I can't work in the financial industry. However, the CPA made the mistakes but was not liable. My attorney's could not get the IRS will not work with me or my attorney for any type of compromise and as a result financially I was ruined by a CPA. So there are always a good and bad to every situation. In my case the law would be good but understand most CPA's are honest and take their work seriously. Food for thought!!
Posted by: goodtaxlaw | January 22, 2013 1:44 PM
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I am a CPA and have been preparing Individual Tax Returns for over 40 years. During that time, I have prepared numerous tax returns that were previously prepared by individual preparers and large franchise operations. The quality of the prior returns were most often BETTER when prepared by the sole practitioners. I personally know several sole practitioners who were about to end their practices because of the IRS regulations. Thanks to the recent Federal Judge's ruling, the American public will be better served by the thousands of sole practitioners then by the 'Assembly-Line' Franchisee preparers! GREAT RULING JUDGE!
Posted by: tomm1015 | January 22, 2013 1:11 PM
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BRES it's amazing that you knew this was illegal, you apparently are a better guesser than most people. If you were suspended, there was a good reason. This is a loss to the general public, since you no longer want to comply, it is YOU who needs to be regulated.
Posted by: redinked | January 22, 2013 12:59 PM
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I have read the entire memorandum opinion and it seems that where IRS overstepped their bounds was in mandating the regulation. When you take the EA exam (I am an EA), you voluntarily agree to come under Circular 230 regulations and to practice before the Internal Revenue Service in representation, etc. The preparation of a tax return is in itself not practice because if an individual prepares his/her own return, it is not practice, just preparation. Although I do not like the mess that has been created, if you read the memorandum carefully, you can see where IRS went wrong. I hope that they take the high road and re-write the regs to include RTRP's as licensed preparers who cannot represent in audit (thus preserving the EA)subject to educational requirements, and work with NATP and the other tax professional organizations to promote RTRP's and EA's to the public as educated and competent in a move to put the "tax mills" out of business.
Posted by: Taxlady@62 | January 22, 2013 12:49 PM
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I have been doing taxes for 38 years, had my PTIN number when they first became available, a POA, and attended continuing educational classes during that time. I sat side by side with CPAs, tax attorneys, and EAs during my classes getting the same information as they. I did and still do object, especially the CPAs,, being exempt from any requirements that we as "regular accountants" are not. I have always said some of my best clients came from CPAs and large firms because of errors in their returns. Hang in there courts, I believe the right decision was made!
Posted by: Ann LaFoe | January 22, 2013 12:41 PM
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I have been doing taxes for 38 years, had my PTIN number when they first became available, a POA, and attended continuing educational classes during that time. I sat side by side with CPAs, tax attorneys, and EAs during my classes getting the same information as they. I did and still do object, especially the CPAs,, being exempt from any requirements that we as "regular accountants" are not. I have always said some of my best clients came from CPAs and large firms because of errors in their returns. Hang in there courts, I believe the right decision was made!
Posted by: Ann LaFoe | January 22, 2013 12:41 PM
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What the IRS attempted was illegal. Not only based upon the judge's decision but based upon the the 1913 amendment and the 1914 income tax act passed by Congress which set up a "Voluntary Compliance" system of reporting and paying income tax. This is: "A system of compliance that relies on individual citizens to report their income freely and voluntarily, calculate their tax liability correctly, and file a tax return on time," according to the Internal Revenue Service. Once you force preparers to "register" or to be licensed you are admitting the fact that the system is no longer "Voluntary" thus voiding the amendment as passed. Only Congress can change the law. Period.
If the IRS wishes to make the RTRP system voluntary I would be the first in line but they overstepped their bounds by trying to make it mandatory and the court was right to stop it. Having the Registered Preparer designation show the taxpayer that their chosen preparer has proven his or her competency in the eyes of the IRS would do nothing but benefit everyone involved. Leave the system in place but make it a choice and let those who do not want the designation explain why to their clients.
Posted by: DrHoodoo | January 22, 2013 12:39 PM
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The most recent ruling concerning the legally of RTRP is a valid. However, the current EA exam is not an entry-level examination but rather a, "Gold Badge", held by few. We need to have an entry level credentialing process, not a national licensing, that is the State's job. This problem has existed in the Medical field for many years. As a result many of the Medical/Allied Health professional formed National Boards. This is all done not for the individuals, but rather the patients goodwill. So why not keep the RTRP as a means certification within the IRS, voluntary of course as a step towards EA. I believe that such a certification would work if it allowed certain representation levels and serve the people a reasonable means of addressing issues within the IRS. I think we owe it to the public as well as ourselves. thj
Posted by: THJTAX | January 22, 2013 12:33 PM
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Article I, Section 1: All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.
Congress cannot delegate this authority.
Letting unelected bureaucrats make law is dangerous, especially when those bureaucrats work for unconstitutional agencies, like the EPA.
Posted by: MikeCPA | January 22, 2013 12:15 PM
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As of 1/22/13 10:07am IRS PTIN system down: PTIN System Down
The IRS Preparer Tax Identification Number (PTIN) system is currently unavailable due to system maintenance. We apologize for any inconvenience.
Page Last Reviewed or Updated: 2013-01-22
Posted by: actgsvsco | January 22, 2013 12:08 PM
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I knew the entire time it was illegal, but that does not stop Obamamoron. Just an executive order and off we go. I complied, but no more. You guys are nuts not to view this as a win. I practiced as a CPA for 25+ years and they suspended me via a fraud by my deceased ex-wife-try that.
Posted by: BRES | January 22, 2013 11:27 AM
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