Tax Pros Speak Out on RTRP Regime


Blogs, discussion boards and comment boxes are filling up with reactions to the IRS requirements for testing, licensing and continuing education for Registered Tax Return Preparers. This writing by tax preparers paints a vivid picture of how the industry is responding to the sea change represented by the new designation and requirements.

Most of the conversation on blogs and boards so far is a matter of accepting or despising the new requirements. Many commenters cite their long experience and continuing education in tax preparation with no licensing, testing or formal requirements. Others claim that the requirements will force many out of tax preparation and create a dearth of preparers in the next few years. Still others decry unneeded government oversight or say they have a tax prep practice that's too small to warrant the costs of testing and continuing education.

On both extremes of the question, emotions and conviction run deep. "Everybody knows it's nonsensical and simply fundraising. Will it improve the quality of tax prepartion? Not one iota," wrote one reader of TaxProToday's interview with David R. Williams, the director of the IRS Return Preparer Office ("IRS's Williams: It's Test-Taking Time").

"Based on the sample questions I've seen, the RTRP test will require memorizing great amounts of information, whereas we rely on software for many of the determinations that we make when doing our returns -- dependent qualifications, filing requirements, other items too numerous to mention," said a preparer on the blog from the software vendor TaxWorks. "It will be open-book, but looking up all those details will be time-consuming. A test-taker has 2.5 hours for 120 questions, which is barely over one minute per question."

Some blogs and boards are worth frequent visits for useful details, suggestions and addressing of rumors concerning the certification and testing. One preparer on the Facebook page of the IRS Return Preparer Office, commenting on how a preparer of long experience is leaving the profession due to an anxiety condition about the test, floats the idea that a long and unblemished record as a preparer could allow someone to be "grandfathered" into the RTRP designation, an idea echoed by a commenter on the TaxWorks blog.

A blog of the National Society of Accountants also addresses talk of two tests for RTRPs, a 1040 test and another test for businesses and entities. "This sure seems premature," blogger concludes. "Let's get the RTRP program up and running before we try to anticipate how to make it better."

The Facebook page of the Preparer Office offers one of the most diverse lodes of comments from RTRPs. One noted that the test seemed to have been made tougher recently, and others asked about CPE tracking, nearby test locations and any IRS plans to offer the test outside the U.S. (The Preparer Office seems to respond quickly to comments when a response is needed, and frequently updates a broad selection of tips and information regarding the requirements.) Many others who have taken and passed the test offered encouragement to those who have yet to take it. "I wish there was something for people who do not take tests well," said another commenter. Williams acknowledged in his interview for TaxProToday that a looming exam could, for tax preparers who in some cases haven't taken a test in years, create "a lot of test anxiety."



A growing number of commenters have said that the requirements will better the profession. In reaction to the TaxProToday Williams interview, one reader likens tax preparers to manicurists, dog groomers and hairstylists, all of whom need licenses. "It mystifies me that so many people who prepare taxes for compensation are so opposed to a certification process. If you prepare taxes for a living, you should quite easily be able to pass an open-book exam! Don't you see that, in the end, this helps our profession?" the reader wrote.

Dr. Jim Hasselback on his blog "highly recommends anyone in the tax preparation field become an RTRP unless they are already a CPA, attorney or EA. An RTRP designation will enable you to have the ability to promote and supervise other tax return preparers, and have job security. If you are an RTRP, this designation allows you the ability to work anywhere and provides you the freedom to work for yourself."

One long-time preparer on the TaxWorks blog threw himself into studying for the designation right after the new requirements were announced. "Even if you do taxes every day, you will be surprised at how much you do not know," he wrote. "People with the correct attitude will become RTRPs and the public will be better off, and those of us who stay will be, too."

Comments (22)
Since the fees for the RTRP exam is a one time deal I don't know why any one should close their business because of this. Please think it over and retire or close shop for some other reason.
Posted by 4thcareer | Wednesday, November 21 2012 at 3:32AM ET
I took the RTRP exam and passed today. I took the California Tax school RTRP Test Preparation course. They offer you a mother load of questions and you use the publication 17 to look up the answers. You learn a lot this way. You can send the answers in and you will be charged only when you submit the answers. Since I already finished my CE requirements with them I did not send the answers. I finished quickly answering the questions in 1 hour and 20 minutes and then went back and checked the ones I marked by using reference material. Even though you have reference materials provided, it is not easy to find the information. It is better to take some course like the one offered by Drake to see how the reference materials are presented. I used to work for HR Block. Many of the people who work there have no clue about what they are doing. As for CPA,s unless they are tax preparers they no nothing about the subject. I also have seen some work done by CPAs. They automatically deduct $4995 dollard for charitable contributions in kind with bogus information and repeat it for 3 consecutive years for the same tax payer and these taxpayers would get mad at me when I tell them I cannot just copy what the CPA did. I am not knocking the CPAs.Just stating some problems. Last season I saw this from 3 different CPAs from different states.
Posted by 4thcareer | Wednesday, November 21 2012 at 3:16AM ET
The court ruled today that the PTIN fee is constitutional.
Posted by DLZALLESTAXES | Thursday, June 14 2012 at 12:47AM ET
The blanket exemption for CPA's and Attorneys is absurd. 95% or more of attorneys do not, and can not, prepare tax returns. 40% of CPA's are in Education, Government, and Non-Profits; 40% of CPA's prepare financial statements or are auditors; so only 20% of CPA's prepare taxes, and many of them prepare only business tax returns. I've proposed for years that CPA's have specialized designations, just like attorneys, doctors, and dentists.
Posted by DLZALLESTAXES | Thursday, June 14 2012 at 12:44AM ET
Software is an ordinary and necessary tool in our work. Tax preparers must be masters of the software in order to be efficient. Each click must be deliberate, the worksheet, the form, the line, the amount, all while considering "the rule". The IRS encourages taxpayers to do their own. Now thats the largest group of incompetent tax professionals I know of, with lawyers a close second. I expect the fallout from the new regulations to be significant. There are just not going to be enough NEW tax professionals to replace the old. It will be interesting to watch. The taxpayers will definitely hold the IRS responsible for the shortage while still expecting their returns on time. Have they thought about the tax preparation job losses that will result or are we just a class of small business people who must be purged for the new fundamental change of America?
Posted by hisexcellency | Wednesday, June 13 2012 at 10:05AM ET
Thank you, Mr. Stimpson, for quoting the comment I posted on 5/22/12 in response to your 5/14/12 article "IRS's Williams: It's Test-Taking Time." It is nice to know that you read our comments. Keep up the good work you are doing covering this controversy!
Dawn M. Kennedy, Enrolled Agent
Posted by trixiespishak | Monday, June 11 2012 at 2:13PM ET
I am glad that this test is required. I prepared taxes at HR Block for three years. I just obtained a Master's degree with a 3.95 GPA.

I was a first-time pass on the RTRP test and while it may be challenging for those who have no tax experience, it should be easily pass-able by those with experience....which leads me to my next point:

I think many experienced tax pros at HR Block will have trouble passing the RTRP test. I know several tax pros at HR Block - in my office - who were lazy. The people who had been doing taxes for years were the worst.

They would tell clients that there was a 'standard deduction' for clothing donations (IS NOT!) and other such nonsense.

These older people 'coast' because they rely on the software.

I'll be very interested to see if HR Block tries to wrangle the IRS to lighten up on the requirements. "Supervised" preparers - i.e. those who don't sign a tax return - don't need to take the RTRP test.

I bet HR Block will try to change that to say that "supervised" preparers can still sign the return.

HR Block will have to start paying its tax pros more because they won't have an influx of newbies every year. I guarantee you that their yearly influx of new tax pros will decline dramatically.

HR Block likes to hire a lot of newbies every year and pay most tax pros minimum wage while making them all fight for a few hours of work a week.

HR Block has, in the past, kept keep everyone's total work hours low (below the 1,000 a year ERISA mark for sure), so as to avoid giving them benefits required via ERISA.

The only thing I don't like about the new RTRP program, as a sole proprietor, is the fact that the IRS employees don't answer the phone for PTIN issues with an employee number. When they answer about individual taxes, they have to recite their employee number.
Posted by debrasth | Wednesday, May 30 2012 at 6:40PM ET
It has always been my understanding that the Income Tax was "voluntary" and, as such, the requirements of reporting had to be simple enough for any citizen to handle themselves. Once a licensing program begins, especially one that is supposed to prove "proficiency", this claim made by Congress is nullified. Thus I must agree with the Institute For Justice that any licensing program must be approved by Congress and, should they do so, the whole concept of the "voluntary" system must be addressed and repealed. That said, after working in this industry for more than 25 years and at one point owning a firm that encompassed over 1000 individual clients and 52 corporate clients, do you really think that this test has been put in place to verify my knowledge and ability? It is clearly another tool for the IRS to use to enter my office and dig in my client files without following the proper procedures. Prepares will no longer be able to use their experience and knowledge base to interpret the Tax Code in a way that disagrees with the Service's interpretation without the threat of losing their livelihood. These "Licenses" are only being implemented so they can be used to threaten and control. Those of us who are not forced out of the industry do to the extra costs will be forced out due to stress. One more thing: don't even get me started on CPA's! I could spend days relating story after story about the kind of garbage I have seen come out of CPA offices. I have made a career of repairing the blatant mistakes and stupid moves made by these "highly educated" and "professional" tax prepares.
Posted by DrHoodoo | Wednesday, May 30 2012 at 5:20PM ET
mgripentrog....but I was right, it finishes at $150,000. Look, all tax preparers have to rely on the software more or less and while I may have come across not saying what I meant completely, of course there is more to doing a tax return than just entering numbers in software but nonethelessw no matter how experienced and knowledgeable a CPA might be, that doesn't make him or her any smarter than many people who are not CPA's. Somebody shows you a tuition slip, you have to know there are many possibilities for the most advantageous way to handle it but I defy you to tell me you are completely sure in every case and you don't rely on software to optmize it for you...that's what the software is there for. I don't think the IRS itself understands all the passive loss rules. I do take a curse every December to brush up on all the changes, practice them at my class with my software and given the complexity of the code, I just can't conceive anybody doing anything but the simplest of returns without the you want to do a separate calculation of how the AMT factors in for every return you do?

I will stick with my opinion this is just one big money grab by a variety of vested interests whether it be CPA's, the IRS, the state revenue agencies to drive smaller operators out of the business and make an extra buck or two.

But I do appreciate the correction.
Posted by JEFFJAGUAR | Wednesday, May 30 2012 at 12:57PM ET
I have a very successful tax practice that I have built over the last 34 years. I prepare over 500 returns in a very efficient and accurate manner. I have a MBA in finance and additional financial studies which is more education than most CPAs. I own an office building, have an employee and have invested in leading edge equipment only to see some federal bureaucrat decide that I need to prove myself while my competitors can sit back and revel. What bites me the most is that the IRS unilaterally revoked my right to prepare taxes for compensation and issued me a temporary license to continue until I can prove myself. Even then I can no longer provide tax advice during business and financial planning as I have for more than 3 decades. I do not belong to a group that is well funded and can lobby to exempt me from the new requirements and I am not part of a large commercial preparation company who wants competition squashed. This is all said to be done to protect the taxpayers. This is familiar reasoning used by governments to seize control of private industry.
I will be closing my practice 12/31/13 and applying for Social Security as I will be 64. The tax preparation system has become corrupt at the highest level and those with access have been given the opportunity to receive the spoils.
Posted by hisexcellency | Wednesday, May 30 2012 at 9:22AM ET
I find it scary that many tax preparers seem to rely on tax software so much. Software is a tool and is not a substitute for knowing how a tax return should look. Preparation without careful review of a tax return is unacceptable as far as I am concerned. I wonder how many preparers actually understand concepts such as passive loss limitations etc. By the way, Mr. Jaguar, the rental loss phase out begins at $100,000 not $125,000.
Posted by mgripentrog | Wednesday, May 30 2012 at 8:00AM ET
I am a small business sole proprietor have been preparing taxes for 37 years. There were no software programs when I started doing taxes. When testingd became available and CTEC became a requirement, I started taking the continuing education courses and exams and became a member of CTEC, renewing every year. I was testing before testing was a requirement. My issues with the requirements forced upon us today by the IRS are 1.) as one of the previous commentors pointed out, non RTRP's can prepare the taxes as long as someone in the firm is an RTRP and signs the return; 2. with the cost of annual continuing ed, the IRS competency test, the annual renewal of my PTIN (what's that all about - kind of like having to pay to renew your SSN every year), the renewal of my annual CTEC membership, and the ProSeries software so that I can efile, which is now a requirement, I made a whopping $2,300 this tax season after costs and overhead. Yeah! I'm seriously considering closing my business. I have 52 clients, 34 of which have been with me for over 30 years. I keep my costs to my clients as low as I can to keep their business. But the costs of doing taxes are overwhelming for a small business like me.
Posted by catkimball | Tuesday, May 29 2012 at 10:20PM ET
I have been preparing 20 to 25 individual tax returns for more than 25 years as a sideline to a bookkeeping business from which I am now retired. Five years ago I started working as a volunteer with the VITA tax program preparing returns for individuals and families with incomes up to $50000. For the past two seasons I have been a Site Coordinator. I registered for my PTIN and EFIN two seasons ago and have used the small amounts I charged to pay for my software, preparer insurance, filing fees, etc. Although I am willing to take a test, I realize that the cost of the continuing education along with the other fees would scarely be covered by my earnings. I have never done business returns (except for Schdule C)and have no interest in doing so. The VITA program requires yearly certification, which takes quite a bit of time and should (in my opinion) cover most of what is needed to prepare individual returns. My concern is that some of my clients, whose incomes exceed the $50000 limit have limited choices--including H&R Block and other tax preparation organizations well known for overcharging for simple returns. Having originally been trained by H&R and having worked for them one season, I am not confident that they adequately supervise preparers and also, the pay is still dismal.
There should be some alternative for small preparers like myself. Since that does not seem to be in the works, I plan to close shop and concentrate VITA.
Posted by MDEMCISAK | Tuesday, May 29 2012 at 4:21PM ET
The test is NOT that difficult. I truely think all the IRS wants is to see if you know anything about circular 230, have SOME ethics, know how to look something up and are willing to learn. Truely H&R, Jackson-hewlett and other chains will benifit greatly by independents dropping out. Bottom line is this test will NOT make you or break you IF you are an honest tax person you will pass. My main complaint is like the PTIN deadline that got extended, because everyone waited till last minute. Flooding the system. This will happen here. My true thought is it is the last minute person that is probbly not belonging here anyway.
Posted by Yourtaxmatters | Tuesday, May 29 2012 at 4:08PM ET
I have been preparing tax returns since 1995. I have not taken an exam/test in over 20 years. I was scared to death & afraid to take the test. I actually took the test in March and received my acknowledgement in four days that I had passed. My test was on the year 2010 information. I simply studied as much as I could and than chose not to take clients or prepare returns for four days. I have over 200 clients all highly professional individuals with incomes to match. If I can do it anyone can do it. Give it a try, yes you must study because no matter how much you think you know there is always something that you have never dealt with before. I thought it was a bad idea at first but now that I have taken & passed the test it is a good idea. It shall eliminate the individuals who should not be preparing tax returns. Yes, our software systems do most of the work for us but we need to know and understand where to enter the information. Plus be able to explain it to our clients.
Posted by BARBJT | Tuesday, May 29 2012 at 2:20PM ET
I have been an Enrolled Agent for many years and have always felt that it did not make sense to be in a profession that dealt with highly confidential information and yet not require licensing. My tree trimmer is licensed but tax preparers aren't?
What does irritate me is that I have a very small practice and have to pay to renew my EA licnse and also pay for an annual license. That should be changed as it appears it only a revenue raiser to require both.
Posted by 235court | Tuesday, May 29 2012 at 1:44PM ET
I know I'm going to offend some.
We have two sides here. Those that want to run software for compensation and the true tax professionals. The first group plugs in data from source documents and depends on the software to give them the correct answer. I can train anyone do that, and have in the past. This isn't tax preparation, it's data entry. I've seen these same people prepare and massacre corporate, partnership, trust and estate returns. Without extensive and formal education, they fail to realize just how complicated these returns are and how unqualified they are to prepare them.
A true tax professional knows what the results of a tax return should be without having to depend on the software to give them the correct answer. A true tax professional would want to attend annual continuing education and would strive to obtain the CPA, EA or RTRP designation.
I am a CPA with 25 years experience. I must attend 40 hours per year of continuing education. I was required to obtain a BS in accounting and serve 2 years of slavery working for another CPA before I was awarded my certificate. The CPA exam took 2.5 days to complete. Most don't pass any of the parts the first time they take it.
In contrast, I find myself competing against a preparer in my home town who worked as a butcher at a local grocery store and decided one day that he wanted to become a tax preparer and accountant with no training whatsoever. If my quality of work was at his level, I could be charged with malpractice. If he really knew what he was doing, he could be accused of preparing fraudulent returns. But, due to his lack of qualifications, he just plugs in what he has and e-files it. There's almost 73,000 pages of federal tax code. I don't have those memorized, but I know how and when to go look for the correct answer. This guy has never been exposed to it and doesn't care. He's just one of thousands out there. These people need to either step up or find another profession.
Would you want an uneducated and unqualified dentist, doctor, barber, dry cleaner, building inspector...?
And some complain about a 2 hour open book test....
Posted by v-rodcpa | Tuesday, May 29 2012 at 1:30PM ET
What I have noticed this season, some check cashing organizations are allowing their NON-PTIN employees prepare the return in their system and someone offsite sign off on the return. If I have to go through this headaches, they should also. I have been preparing tax returns for more than ten years, now I have to set-aside funds for software, renewal of my PTIN, CEU's and this exam. As a small bookkeeping and tax service, this can become difficult, as it reduces profit.

If I were to function as the check-cashing agencies, it would more than likely be viewed as a violation, as I could not honestly sign off as the preparer. Next the agencies who use volunteers have the same requirement as paid preparers. Fair is fair, the for profit companies, especially the small to mid size tax prep companies should be grandfathered in to receive those grants, as well, to help them recoup some of their additional costs.

Finally, they should amend the 8888, to allow preparer to receive their fees, again to help eliminate some of the fees to our clients.
Posted by JadeD1963 | Tuesday, May 29 2012 at 1:10PM ET
The Institute for Justice, a Libertarian version of the ACLU, has filed suit against the IRS alleging that the IRS did not get Congressional approval for this regulation scheme and only Congress can set up such a licensing provision. While I don't mind the regulation itself and believe it will improve the level of our business, it does add one more way for the IRS to snoop and threaten our futures. Who will not at least wonder if his or her aggressive actions on the part of a client in dealing with the IRS might not come back to bite them when renewing their certification? The Institute for Justice alleges that the IRS will be able to do just that if this regulation is allowed to stand.
Posted by mrdocuman | Tuesday, May 29 2012 at 12:33PM ET
I started doing tax returns for the year 1946 with a tax attorney and when he retired 42 years later, he left the tax practice to me. I have just under 100 accounts which keeps me pretty busy along with my LDA business. In California we have the state requirements under CTEC which are easy to maintain.
I realize only Oregon and California are progressive enough to have these requirements of education on taxes and ethics, but feel very dented that the IRS has gone so overboard in their testing methods and feel I will probably sell my little practice and am concerned about my clients, some of whom I have been doing their returns since 1946 and probably know more about their business than they, themselves, do.

I don't feel I will go for testing. What with the cost of the proseries program (which I trust and love), education and now testing results, I don't feel it is financially viable.

Thanks IRS for putting me out of business.
Posted by | Tuesday, May 29 2012 at 12:23PM ET
Licensing is trade restriction, pure and simple. This is the H&R Block revenue enhancement regulation.
Posted by Skipper50 | Tuesday, May 29 2012 at 11:55AM ET
Several points. I took the exam and passed but then again that doesn't make me a better or worse tax preparer. Of course I rely today on software for many of the idiotic things such as when do (this was not one of the questions which I'm not supposed to disclose and won't)the ability of a tax payer to deduct a real estate loss from income phase out (it starts mfj at $125,000 and completes at $150,000...again it wasn't askerd, I don't kn ow if there are alternative versions of the exam)......but do I reallyt have to know this? I mean I enter the rental income and the expenses on a Schedule E worksheet on pro series and if it is iallowed, it is allowed. Other things were in Publication 17 and I had to look them up but then again the software would have taken care of it. You should be allowed to use your lap top and your software on the exam.

Secondly, as I sdaid elsewhere, this will not stop some people from continuing to prepare taxes using turbo tax and marking the return non paid preparer. I ran into several people who refused to embrace mandated electronic filing (why I don't undertand, it makes life so much easier) who simply marked their returns non paid preparer. The same will be true with this silliness.

Finally, is this just a grab at extorting more money from tax preparers by the IRS (paying each year for a PTIN, paying $116 for the exam), paying for CIE credits? And just because somebody has a CPA, doesn't make them a better tax preparer than somebody who has gained from experience.

But I played the game, walked in last week cold and passed the exam. But it really has nothing to do withjust how competent I might be.
Posted by JEFFJAGUAR | Tuesday, May 29 2012 at 11:50AM ET
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