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Clients Puzzled by RTRP Ruling

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As tax season opens, only one group might be more confused than preparers over the future of the IRS’s legal ability to register preparers: clients.

“Most taxpayers out there are on information overload and they don't know what to think anymore,” said EA Lynn Schmidt of Winter Haven, Fla.-based Lynco Financial & Tax Services Inc.

Though the Loving case hasn’t been an issue with her firm’s clients, EA Betsey Buckingham, a member of the tax staff at Troy, Ohio-based David C. Murray & Co. CPAs Inc., and president-elect of the National Association of Enrolled Agents, said, “I know some folks who scrambled to take the RTRP test and, while I haven't spoken to them, if it were me I'd be incredibly angry at the amount of work I had to do to study for the test and the fee I had to pay.” 

EAs said that although the decision striking down the service’s legal power to register some preparers doesn’t affect them, clients who have followed the media stories still have questions. “I have not told my clients [about the decision] yet, but I probably will,” said EA Mele Perrego of Clayton, N.C., a member of the NAEA and vice president of the North Carolina Society of Enrolled Agents. “I have told my clients about the previous requirements for licensing because I feel strongly that anyone who is paid to prepare a document that a person signs under penalties of perjury should know what they are doing.”

EAs are also offering advice to clients confused by the recent spate of new credentials, both proposed and real. “When the client can afford it, I always recommend a CPA or EA,” said tax attorney and EA S. Matthew Golding in Mission Viejo, Calif., a member of the National Association of Tax Professionals.

“Otherwise, when clients are looking for something more economical, I always recommend for them to interview the tax preparer,” Golding added. “Even before the decision was handed down, I let clients know that the Tax Code changes regularly and you want to make sure that the preparer you select has been keeping up with these changes. As such, when clients ask about the recent court decision, I let them know that it is still important that your tax preparer has completed training and, at a minimum, enough CE credits to stay abreast of new tax changes.”

Golding also advises potential clients “not be shy” when asking about credentials, and, if a preparer questioned about the court decision claims additional continuing education is unnecessary, “It may be best [for the potential client] to continue down the list” of preparers, Golding said.

19 Comments

Why is it that no one has said anything about the PTIN renewal system. When IRS re-opened it on Feburary 13, 2013 they added a 'Credential' page. No one but CPSs, Accountants, Actuaries and a few other small groups can use it. IRS's own statistics on January 24, 2013 said there 320,172 PTIN number holders who had not complied with the new rules. January 18, 2013 the Judge told the IRS to forget the Rules. By adding the Credential page, the IRS is thumbbing its nose at the THREE HUNDRED Thousand preparers out there. Where is the outcry about this? jb.tax

Posted by: jb.tax | February 15, 2013 7:41 PM

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At first I wondered why I had to take the test after preparing taxes for 25 years with no problems that weren't solved. But I prepared for the test and passed it. I always took courses each year that I didn't get credit for. But after a lot of thought, I felt it was important to be registered as an RTRP. If EA and CPA have to have credentials, why not the regular tax preparer. We get put down by EA and CPA's because we are not registered and try to claim we don't know what we are doing. I know that many people do taxes for others and don't sign them, but get paid under the table. I have had this experience with someone in my neighborhood who took several clients away from me. But I have also found that people using programs have lost money if they didn't know what to do and I have amended clients that messed up on their returns trying to do them themselves. I take pride in my work and am proud to be registered. Now I do get credit for all the CPU's that I take online or at a tax school. I feel this is a very important step for the IRS to take to weed out the imposters and illegal tax preparers.

Posted by: dairylady | February 15, 2013 9:39 AM

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September 21, 2012 received RTRP card from IRS. It took 4 months of study.(why 4 months, failed twice, had to keep on... why, only 6th grade education, I needed this RTRP) Now, it is no good after 570 miles, $ 348.00 in fees, $ 95.00 in gasoline, $ 75.00 in meals, plus 642 hours of study. Also I passed the CE, usually I travel every year ot IRS forum, or other forums. I am so hurt, and disappointed, I worked so hard. Well the pay off is I can serve my Clients with the knowledge I have learned and will continue to keep up the CE, every year.

Posted by: hitsero3 | February 14, 2013 3:16 PM

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When the IRS decided that we must have a PTIN, I complied. The next thing I knew I was facing the business end of a double barrel shotgun to comply with the RTRP registry. Now, here is my concern: I am now in my 34th season preparing returns; I am 61 years old looking real hard at retirement and this RTRP seemed like a good enough reason exit left. I have seen my share of fly-by-night preparers come and go - they never last long in one place. In 33 years I have made my mistakes mostly key punch error, rarely technical - which are easier to resolve than a typo.

A registry program would only legitamize honest preparers; never the fly-by-night ones. Kind of like outlawing guns - only the criminals would have weapons while the compliant would be further exposed to criminal acts against them. The RTRP is birthed with the same mentality. A test only proves one can take and pass a test - and in no way demonstrate the accumin of knowledge.

HOWEVER, even though I consider myself fairly competent to prepare a tax return (at least I know which way to hold the form) I am not opposed to CPE's as an annual requirement to renew the PTIN.

I would not be opposed to a graduated testing program based on number of years preparing returns, the number of returns prepared, the complexity of the prepared returns and the IRS audit analysis of those returns with a longevity phase out that senior preparers of good reputation would be exempt from testing.

Any qualifying program will always push marginal preparers and twilight (semi-retiring) preparers to prepare returns without signing as any level of preparer and still collect a fee even if it was gratuitious.

IF any regulation needs to be implemented it would be in the area of online and in the box preparation packages neither of which require any level of compentecy to use; and woefully allows the unscrupulous preparer to use time and time again without any oversight

Posted by: motaxclc | February 10, 2013 7:17 PM

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I agree with M.E.Norman35TN21. If they make others have licensees, than why not tax preparers. I have 100 clients and I have been going to the IRS forum and taking the update classes through my software company for years now. I like it when I know what is going on. I also made a mistake or two on a tax return but since I review all lines with my client I caught the mistake. A person who only knows how to enter information might not know a mistake has been made if they do not know how to really prepare a tax return. One thing the requlation made me do, which was in my favor, I took the test to become an Enrolled Agent and passed. Congress has passed all these laws for this easy money. Now they want IRS to recoupe this money but it seems IRS does not have their backing to do what they think is right. I am not sure what really needs to be done but a crook at the lowest level will always find a way (credentials or not).

Posted by: born2win | February 6, 2013 10:09 AM

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How is it that the hair dressing/nail industry must be regulated but not tax preparation? Having sat for the CPA & not passing it yet and having a busy bookkeeping & tax prep business of well over 100 clients, I welcomed the RTRP program. Over the years, I continued my education through research using the IRS website & reading books, magazines, e-mails from several professional accounting education/training companies. I had no proof of this continuing education until the RTRP program. I spent money & many hours attending webinars & seminars. I spent many more hours practice testing & studying for the RTRP. And, I spent more money taking & passing the RTRP the first time. The test was too easy; or maybe I was very well prepared. No matter, I took the time, spent the money & passed the exam. I'm proud to display my placard from the IRS proclaiming I am a Registered Tax Return Preparer. This program was exactly what I needed to push me to again study & prepare for the CPA. My clients & I all benefit from my continuing education & professional credentials. I firmly believe that all persons in the pay for tax prep industry should be regulated & required to continue their education. What now: can I use my RTRP designation?

Posted by: M.E.Norman35TN21 | February 3, 2013 8:18 AM

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I think the IRS has enough information now to focus on those who refuse to act in a professional manner. The PTIN information or lack there of will afford the IRS the opportunity to pick those paid preparers where the likelihood of error is greatest and audit returns prepared by them.

The less education and formal training one has, the more likelihood of error. On the application for the PTIN, one has to indicate, I am a CPA, an EA, an attorney or someone who is none of the above. I doubt that the PTIN requirement will go away, the only thing that the court case has done is not permit the IRS to force those who do not have the credentials to take a test and receive ongoing training.

Posted by: CPAsince87 | February 3, 2013 7:53 AM

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The issue has always been about power and money. This article and many of the articles we respond to quote players who stand to benefit from regulation scattered with a few objections from those of us who recognize the real issues. Those who could benefit tout the reasons why and yet like our politicians making laws, the actions do not solve the real problems which come from WITHIN the IRS and government in general. There is so much money involved that it has to be corrupt. Stealing money from the American taxpayer is lucrative as we have seen just from the growth in tax fraud through identity theft. They have made it easy. No faces, just computers and bank accounts. None of my clients have revenues and expenses in the trillions yet. Most of them are bad bookkeepers just as those in Treasury they just can't put their fingers on where those hundreds of billions went. Stop kidding yourselves and us about the professional status and self-esteem etc. issues. We have bigger problems than having to adapt to a broken system with no real fix in sight. Look at how messed up it is so far this year. Can you imagine 100,000 fewer preparers? We are ultimately at fault as we elected attorneys as leaders who have little formal financial education. But who better to make rules for us? I just wish they were smarter.

Posted by: hisexcellency | February 2, 2013 8:03 AM

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Well, we have all seen the IRS come down with a pretty heavy hand on individuals who don't file timely returns, or correct returns, or pay their tax bills in a timely manner. The IRS is the only agency that can seize property without due process of law. So it's not a surprise to see them try so hard to push through the idea that they can register tax preparers in the same way as Enrolled Aagents or CPA's. The IRS really doesn't want tax preparers. They make more money from tax payers improperly filing their own returns. CPA's and EA's really don't want tax preparers because less competition would benefit their practices. Optimistic tax preparers who have already complied and taken the test are hoping that their practices will benefit from the credential. Many tax preparers are offended that after years and years of properly filing tax returns for clients for a modest fee that their integrity is being called into question with no proof of wrong doing. There is no confusion in California or Oregon. Tax preparers in those states are already registered with their respective state. When more states discover what a cash cow registering tax preparers is, we may see them jump on the registration band wagon as well. They will probably be more successful at it then the IRS. Whether you agree with the decision or not the simple fact remains: The IRS attempted to grab more power than they were entitled to. In grabbing that power they collected an obscene amount of money. A federal judge has ruled against them based on the laws currently on the books and the IRS can't get around this situation without due process of law. And the IRS doesn't want to be bound by due process of law as witnessed by their arguments against the injunction and against the ruling. Will everyone get their money back if the IRS loses? Maybe, maybe not. Are the preparers who took the test now more knowledgeable then prior to taking the test? Probably. Is there going to be less tax fraud in general as a result of what the IRS hopes to do with this program? NO! Is there going to be less competition in the industry, in general, as a result of what the IRS hopes to do with this program? Yes, yes, yes! Based on your comments alone it is easy to see who the EA's and CPA's are and who the tax preparers are. Cash is king. This is about cash and who makes it. You can be an excellent tax preparer without taking a test. But everyone else is still going to dump on tax preparers just the same.

Posted by: Taxman32 | February 1, 2013 2:38 PM

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I have worked for H&R Block for seventeen years and most of my co-workers in the office have been there longer than I. H&R Block has always offered a wonderful series of courses which are taken, not only by us, but by other local tax preparers. In order to work for the company we had to take 30 hours of continuing and advancing education every year. We have our own certification program in order to advance in our field. Our requirements are stringent, and include both a tax update and an ethics requirement. When the IRS announced its own certification program it turned out to be much less stringent than our own. First year H&R Block employees who have taken the basic courses required by the company have been able to pass the IRS exam without a problem. I'm a great believer in training...just not the "training" required by the IRS. We have to pass four or five exams every year on chosen subjects, ethics and updates, as opposed to taking a basic exam once in our careers.

I do NOT believe that the IRS should require a tax preparer to pay for an exam if that preparer is already being trained and tested (80% or above to pass a course) to higher standards than the IRS requires (70% or above to pass), but I have to admit it's a great way for them to make money! H&R Block has more than 10,000 offices in the US with stringent education and certification requirements for its employees. Why should we have to pay good money to the IRS to pass a test that's easier than the ones our own company require of us?

I can tell you what will eventually happen. H&R Block and companies like ours will stop spending the money to educate us and lower its own standard to meet that of the IRS because. Instead of having to pass four or five exams a year, we will only have to take one IRS exam in a lifetime.

I know there has to be more industry regulation, but I do resent having to pay someone to take a basic exam that proves very little about one's actual abilities. It's a bit disingenuous to think that someone will study once for this one exam and be able to do a complex tax return ten years later.

Posted by: diathome | February 1, 2013 2:19 PM

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I do not regret or feel waste of time and money for taking the test. I feel better for my work and the service to my clients. I really do not feel that the extra CE credits that I took helped me or learned more that I already knew. That was a waste of time and money.

Posted by: geomar | February 1, 2013 1:48 PM

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dwspaulding: If you were in any way correct in your statements relating to the IRS's regulatory authority the Federal Judge would not had ruled in the manner that he did. In fact, the IRS had moved for summary dismissal stating that the Loving case had no legal merit to stand on. Had the judge agreed there would have been no further action and the IRS would have prevailed. Sorry but all your high sounding rhetoric only shows that your interpritation of the code is just as flawed as the IRS's.

Posted by: DrHoodoo | February 1, 2013 1:33 PM

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Well tax gal64 you only have 50 clients so you think you don't need to take CE? You are what's wrong with the profession and just why oversight is needed!

And also to mcbookkeeping. You did not waste your time and money. You gained valuable knowledge that you can use to your clients benefit. And you can now tell all your prospective clients about all the education you take to keep up with the tax law-even though it's not required. (although don't hold your breath-it will be)

Posted by: ShortStuff | February 1, 2013 1:25 PM

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This is ridiculous, I have been an EA since 1986 some of the work done by tax-preparers that needed fixing has been less than acceptable and very costly to the client for no good reason. In most cases these preparers have no way making it right because they can not be insured. So why would any one in their right mind object to professional oversight and mandatory education? Simply operating by seat's of their pants does nothing but reduce the value of their services.

Posted by: rptaxrep | February 1, 2013 12:53 PM

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The IRS had no statutory authority to license preparers. That's it, period. This attempted power grab is just indicative of this administration and is rightfully stopped in the federal courts.

Posted by: Skipper50 | February 1, 2013 12:19 PM

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I agree witht the comment above. I have less than 50 clients and the education and test were very expensive. IF IRS loses, I hope they repay all our expenses.

Posted by: taxgal64 | February 1, 2013 11:57 AM

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The comment from dwspaulding is absolutely correct. I feel the exact same way.

Posted by: SNAFU | February 1, 2013 10:21 AM

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I'm really not sure why the Loving case was even allowed to get this far. Of course the IRS (under the US Department of Treasury) has had the authority to regulate and license tax professionals under its Enrolled Agent program. EAs have been around since the late 1800s and are currently regulated by the Dept under the rules of practice as outlined in Circular 230 -for enrolled agents, certified public accountants and tax attorneys.

The IRS is increasing oversight of federal tax return preparers and laid out its general roadmap in Publication 4832, Return Preparer Review. The agency's increased oversight is being phased in over several years and implemented through a variety of new regulations, which began with the requirement that paid tax return preparers obtain and use a preparer tax identification number (PTIN). IRS also requires preparers of tax forms for individuals to demonstrate competency on returns they prepare and to take continuing professional education.

The IRS reports regularly to Congress on matters like this and clearly Congress has been in the loop on the expansion of the licensing program to include a minimal level of competency for ALL tax professionals. Their authority to regulate professionals and their conduct before the Internal Revenue Service has been in existence for over 100 years already! If they didn't have the authority to regulate or license those who practice before them, why has such authority not already been challenged? This is a specious argument.

What a waste of time, legal resources and taxpayer monies! It's in EVERYONE'S best interest that tax return preparation - the results of which are the substantial source of revenues for our federal government - is timely and accurately completed. What better way to do that then to have the entire profession educated and licensed to do so. Congress could end the argument if they would simply pass a resolution that either confirms or confers the Dept. of Treasury's authority in this matter.

Posted by: dwspaulding | February 1, 2013 10:15 AM

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This ruling is all well and good for the preparers that did not take the test nor want to take the test , but what of thosea of us that took the test, what now, we took our time and money to take the test, now where are the results. I myself am highly disappointed that my efforts and money were for nothing. Frankly I am proud that I took and passed that test, but now I have been cheated of the results and certificate.

Posted by: mcbookkeeping | February 1, 2013 9:54 AM

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