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Can You Afford to Wait?

Weighing the merits of postponing the RTRP exam

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Putting off taking the RTRP test until closer to the deadline may be a bad idea. Or it might mean you simply don’t have to test again after regulatory changes. Or it might mean something in-between that seems to touch the core of the whole issue of registering tax preparers. 

Writes Trish McIntire of McIntire Tax Center in Arkansas City, Kan., on her blog Our Taxing Times, “The RTRP testing started last fall and has been completed by only 4,800 people. The IRS estimates that there are 340,000 preparers who will ultimately need to take the test. To avoid a backlog next year, the IRS is sending out letters to preparers suggesting that they take the test early. The concern is that as we draw closer to the deadline, preparers won’t be able to get a testing time due to backlog at the testing sites. I can understand the procrastination and the IRS’s concern. Few people like taking tests and want to put them off as long as possible.”

David R. Williams, director of the IRS Return Preparer Office, acknowledged in an interview with TaxProToday that a looming exam could, for tax preparers who in some cases haven’t taken a formal exam in years, create “a lot of test anxiety.”

All paid tax return preparers must, among other requirements, pass a one-time competency test by Dec. 31, 2013, and pass a tax compliance check. (CPAs, attorneys and EAs are exempt from the new continuing education and testing requirements, as are non-signing preparers employed by law or accounting firms who are supervised by CPAs, attorneys or EAs, and those who do not prepare the Form 1040 series.)

“But there are only 260 testing centers across the country,” McIntire adds, “each with limited seating available for the RTRP test. It is very conceivable that a last-minute preparer might have to try several sites to find an open time for their testing. Another concern is that the preparer might not pass the first time and might have to take the test again.”

In a recent Wandering Tax Pro blog entry, New Jersey-based tax professional Robert D. Flach admits he is one of the 340,000.

“There are several reasons for my procrastination,” Flach writes. “First, I was not going to be among the first to rush to take the test. There was no doubt that there would be some initial problems with the testing, as there always are, and, if I am forced to sit for the damned thing, I want to make sure the IRS, or rather the test giver, gets it right.”

Flach then echoes other preparers (see “Tax Pros Speak Out on RTRP Regime”) who believe that long experience preparing returns should entitle some preparers to a grandfathering of the RTRP designation without having to take the test. “After preparing taxes professionally continually for 40 years without incident, I have no desire to have to take a test to prove that I know what I have been doing all those years,” he writes. “I am hoping that the IRS will come to its senses, or the process of testing all non-enrolled PTIN holders will prove difficult and will allow grandfathering.” 

Flachs adds that he expects to take the test in either early 2013, before the beginning of the tax season and “after I have attended the year-end tax update classes,” or right after the end of the next filing season. 

“The Tax Code is always changing,” Flach writes. “Who’s to say that one year after I pass the test the Tax Code will be totally rewritten and most of what I was tested on will no longer apply?”

Barbara Cook, writing recently on the blog of Drake Software about preparing for the exam, says it’s important to put together a study plan. Her tips to get started:

* Go to the IRS PTIN primer and read about the exam. “The IRS even provides a short video that demonstrates the testing experience and what to expect at the exam center,” she writes.  

• Select a test prep study course (Drake offers the RTRP Test Study Course and the RTRP Test Tips and Overview courses at discounted prices to its customers, plus 10 CPE credits are available for taking the course and are applicable to the new annual CPE requirement).

• Set a timeframe for studying. Do not procrastinate!

• To prepare for taking the multiple-choice and true/false questions you’ll encounter on the exam, practice by taking a sample test.

• You have until December 31, 2013 to pass the exam and it’s OK to fail it. You’re allowed to retake it until you pass.

6 Comments

All this discussion about the test, CPEs etc. is sidline to the real issue of the confiscation of our right to do what we have done for years. The special interests were exempted for reasons certainly invalid, and even firms 80% owned by them are exempt. How much more wrong can it get. The new regulations will put out thousands of small businesses and place the industry in the hands of special interests instead of the market and the people. Unfortunately the IRS scared the hell out of 350,000 people and their employees. There will be many closed signs on small tax firms. I've had several offers to buy my practice by the large commercial firms citing the bureaucracy we are about to experience. The takeover move has begun with the full oversight and cooperation of the government. Our family's personal economic survival now depends upon compliance. The exempts and regulators are able to look down from Mount Olympus at all of us scrambling like scared rabbits. Alone we have no power. Easy targets for protectionism. Our clients and our friends the taxpayers will bear the long term costs.

Posted by: hisexcellency | June 22, 2012 8:13 AM

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I have 25 years tax prep experience. I took the test in January 2012. I didn't study for the test as I felt confident that I knew my job. I did not use the open book approach either, although it is available, as I felt it was just too time consuming. I finished the test an hour early so there would have been time to look up some answers. I felt equally confident that I passed the test when I finished. A month later I received notification that I passed. A couple of weeks after that I received the certificate from IRS. Taking a samply test is advisable just to familiarize yourself with the process. I don't understand why people are making such a big deal out of this. If you know your job just take the test and be done with it. Hairdressers have to be licensed. It's about time our profession is too. It has already driven several preparers out in my small town before they even tested. I saw their work. They needed to leave. They too knew they need to leave. Fewer preparers means more clients for those of us who are competent. It also adds credibility to our profession.

Posted by: ddg656 | June 13, 2012 8:29 AM

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I took the test. No problem for a tax preparer doing tax returns for 40 years. It is the 15 hours continuing education that bother me. Yearly? How much do I have to pay for that? and topics covered hardly ever met in my tax business.

Posted by: D C Silva | June 12, 2012 9:50 PM

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I passed the test in March. The only part I tried to study for was the ethics part, but turned out most of those questions were common sense, T or F. The biggest help was checking out the Prometric site with some sample test questions. It helped familiarize how to go from a question to Pub 17. How to check questions for review and go back to them. So study how Pub 17 is organized. I'd say anyone who has been doing taxes for a few years shouldn't worry. I definitely would not pay to take a test preparation course.

Posted by: janek51 | June 12, 2012 6:28 PM

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I passed it. Not so bad if you prepare a bit for it. I found that the time spent reviewing was good. For the test and preparing returns in general. Just reviewing Pub 17 made it faster to hunt down an answer during the test. Study? Yes, I felt that to NOT waste my time, I would review the various testing subjects to help. I went into the VITA site and ran through its tests for volunteers. Some of the IRS test questions were similar enough that it was time well spent.

If you are an experienced preparer then it's review and organization to get ready. The test covers enough areas that preparers don't see often so reviewing everything to some degree is necessary. Good Luck

Posted by: Oldgolfer | June 12, 2012 2:03 PM

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I also have appox 40 years tax prep & will wait until mid 2013 before taking test as I believe the IRS will discover that it is not feasible to test 340,000 preparers & will come up with some other 'mishegas'......

Posted by: meisen48 | June 12, 2012 11:47 AM

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