The future of IRS efforts to regulate preparers with the RTRP designation rests now with an appeals court -- but preparers aren’t shy about rendering their own opinions on what should happen to what most think is an important designation.
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Enrolled Agent Duane Carey in Napa, Calif., thinks the IRS will win. “If you hold yourself out to perform a service, there needs to be some organization that attests that you meet the minimum requirements,” he said. “Yet in all but three states, any one can set up shop and prepare returns by simply hanging a sign in the window. Many of the franchise tax companies even advertise that no training is needed to buy their franchise.”
“The IRS has the right to require tax preparers to be licensed,” said Burton Carter, EA, of Kingman, Ariz.-based Burton E. Carter & Associates. “You need to be licensed to cut hair, drive a car, sell beer or to be an attorney, a doctor or a police officer. Why shouldn’t preparers be licensed? [But] I don’t think that the public should be made to think that an RTRP should be more important than an EA, CPA or attorney, but that is what people think when they see the word ‘registered’ and the way it was being played up.”
“The concept of the RTRP designation was not perfect but something similar is needed,” added EA Jamaal Solomon of J.S. Tax Corp. in New York. “Let’s face it, some people doing taxes shouldn’t call themselves tax preparers. Why does my barber need a license to cut my hair but anyone can set up shop as an unlicensed tax preparer?”
From the birth of the RTRP proposal, some preparers welcomed the idea and others objected to sudden regulation -- and fees -- on a job they had done unregulated for years.
“The main issue in denouncing the RTRP designation seemed to revolve around the required fees,” noted S. Matthew Golding, a California-based EA and attorney. “With the recent takedown of Instant Tax Service for fraud and the inclination of these services to take advantage of lower-income individuals, it’s becoming more apparent that some sort of safeguard needs to be woven into preparer requirements. Once the technicalities of the RTRP work out, it will be successful.”
Teddy Prioleau of The Tax & Mortgage Shop of America in Hunt Valley, Md. serves on the inaugural Maryland Tax Preparers Board and reported that the group is “going ahead as if the designation will eventually be a minimal designation for preparers.”
“This began as a result of a great outcry from taxpayers caught in the middle of a very disconcerting situation between the IRS and, many times, a less-than-upstanding preparer who took liberties with the return,” Prioleau pointed out.
“The RTRP will come,” said Kay Mortimer, an Aiken. S.C.-based EA. “Tax professionals should be able to prove competency in tax matters to garner the public’s trust. Professionals are committed to that and every tax preparer should be.”
“In my 24 years of experience as a tax professional, I was extremely happy to see that finally tax professionals were going to be monitored,” said Javier Solis of New York-based Los Taxes. “The designation won’t only help tax professionals maintain their credentials and knowledge, but help taxpayers gain confidence in the professional providing tax prep.”
“The IRS will eventually be allowed to govern all tax preparers -- it’s a ‘when’ not an ‘if’ in our future,” said Eric Hansen, an RTRP with Hansen Accounting in Omaha, Neb. “I took and passed the RTRP test and would hope the designation remains in effect for those that have complied with CPE and ethics requirements.”
“Too many individuals out there have been doing returns for many years without any credentials, training or continuing education,” said John Spellman, an EA and president of Tax Team of New England in Nashua, N.H. “Having the designation … will weed out the unqualified preparers.”
“The day when all preparers are required to hold a license may never come,” said EA Brian Mock of Peoria, Ariz.-based Mock & Associates Inc. “All preparers should hold some form of licensing and should be held to higher standard.”
“At some point in time, the IRS will have its way,” said Joseph Kerner, an EA at Ohio-based Taxnow!
Others disagree. “The future of the designation is pretty bleak unless Congress takes some action. I just don’t hear a lot of buzz about RTRP anymore,” said Brian Thompson, a CPA with Little Rock, Ark.-based Bailey & Thompson Tax & Accounting.
“I don’t think the IRS will prevail,” said Cynthia Jeanguenat, an EA with Horizons Unlimited Tax & Business Services in Virginia Beach, Va. She believes that means “the temporary death” of the RTRP because “the recent news regarding IRS scrutiny of nonprofit applications of conservative political groups is fresh in the public’s mind and the attempt to license preparers may not prevail in today’s government-overreach climate.”
“Preparer regulation should lie with the states,” Jeanguenat added. “Oregon, California and New York have stringent regulation, as do others. I don’t think it’s the job of the federal government, via the IRS, to regulate tax preparers.”
Jeanguenat added that the RTRP is no new concept: the Taxpayer Protection and Assistance Act of 2005, for instance, was only one earlier attempt to formally regulate preparers, with language that included enrollment of all paid preparers under Circular 230 and “administration of preparers by a fully-resourced Office of Professional Responsibility.”
“If Congress doesn’t allow or require some type of preparation regulation, more and more states will,” agreed CPA Steven Hanson of Minnesota-based Piehl, Hanson, Beckman.
“The IRS will eventually drop this altogether as there has been so much bad publicity,” said Kathy Hallford, owner of Kathy’s Tax Service in Gilbertown, Ala., and Alabama secretary and education chairman of the National Association of Tax Professionals. “Testing tax preparers is a must! Legitimate preparers should all have to test and then do CPE to stay updated.”
“The IRS just [using] the EA system for every preparer would benefit all taxpayers. If we get paid to provide a skilled service, we should be able to prove we know what we’re doing,” said Hallford, who became an EA in 2007 and an RTRP shortly after that designation became available. “Anyone who’d prepared at least a year’s worth of returns should have been able to pass that test,” she said.
“RTRP is not dead by any means,” said senior tax specialist Bruce McFarland in Belton, Mo. “I suspect that for the short term, the ruling will be in favor of Loving in that the IRS over-stepped. At that point, I see a congressional push … if only to create the designation on a voluntary basis.”
The eventual form of the RTRP remains a question -- Solomon, for instance, thinks the designation will wind up as voluntary -- and others believe IRS actions will determine the outcome.
“The RTRP program will succeed if the IRS does its homework and presents it to Congress in a way to prove that RTRP helps both the taxpayer and the IRS,” said Philip King of Crown Tax Service in San Antonio. “If they don't, the public will continue to be cheated out of proper tax preparation.”
The designation “will survive in some form,” said John Stancil, a CPA in Lakeland, Fla. “Most likely, if the courts rule that the IRS doesn’t have the authority, I anticipate congressional action to provide enabling legislation [and give] the IRS power to regulate.”
“If the RTRP is not held up by the courts at this time, Congress will do something to protect the taxpayers from bad preparers. This will benefit our profession,” said Lawrence Walkden, an EA and RTRP with Snohomish & Monroe Accounting in Monroe, Wash.
“Those who oppose to this designation are sending a loud and clear message: ‘We don’t want to be monitored,’” said Solis. “Why? If tax professionals do what they’re supposed to do, this designation should be an incentive to grow their practice.”