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Should the RTRP Survive?

Preparers debate value of shelved credential

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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.

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?”

Debate continues

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.”

Taxpayers’ need

“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.

Designation’s outlook

“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.”

14 Comments

If a license from a government agency guaranteed competency & integrity, if the government agencies were held culpable for licensed professionals under their supervision, I'd support the RTRP. Hanging unscrupulous tax preparers will limit criminal activity, passing their test accomplishes nothing.

Posted by: Ed W | December 9, 2013 3:49 PM

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If the CPA designation is good enough for the SEC and the IRS and reciprocates though all states in the USA, it ought to be good enough for those that think we should sit for the RTRP. I had to undergo 6 years of testing, both academic and on-the-job to become a CPA.

Posted by: v-rodcpa | December 9, 2013 3:25 PM

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No one who prepares taxes deserves a free pass. You need to be a well-educated tax preparer who will then provide the best service to those who pay for your services of tax preparation. I passed the RTRP designation and test with ease after doing taxes for 30 years. What I object to is that not all who touch a tax return are required to pass the competency test to prepare taxes. This is just unfair!! Congress needs to allow those of us who are RTRPs to use our earned designation. We worked hard to get it, paid a lot of money to get the education needed to maintain it and therefore should be able to use it. I have seen a lot of sloppy tax preparation in my 30 plus years of tax preparation-even EAs, CPAs and Attorneys make mistakes. So test everyone not just a select few. It is no way to eliminate the competition that CPAs, Attorneys and EAs have out there. Be fair to those of us who care about what we do for a living , do it well and deserve the resignation when we earn the RTRP designation.

Posted by: WJS1981 | December 9, 2013 12:29 PM

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"Enrolled Agents have a code of ethics as members of the National Association of Enrolled Agents"

EA's ethics are also covered in Cir 230.

"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."

The states do not regulate the federal tax preparers, just because they "take" information from the federal return doesn't mean they enforce federal tax law.

The IRS should be given the power to regulate all paid tax preparers. I can only hope that when they WIN, they do not give more than 1 tax year to get the testing done. They already gave one of the two years they planned for.

Posted by: cpojj | December 7, 2013 1:23 AM

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If one considers the exponential growth in complexity to prepare individual income tax returns since marginal tax rates were simplified and lowered in 1981 & 1986, preparing tax returns that comply with federal and state tax law necessiates a "paradigm shift" (check out Mr. Joel Barker's discussions in books, tapes, & videos)for tax preparers as a profession.

Of course, the basic tax returns (single with one employer) can even be done by cell phone apps (SnapTax , etc) and the Do-It-Yourself tax software (primarily Intuit and H&R Block) is a completely different category of tax return preparation not requiring professional assistance.

The American public is better served if tax professionals (attorneys, CPAs, EAs, & hopefully soon to be legitimized RTRP)have the minimum competency requirements along with relevant CPE. Also, don't overlook the tax planning aspects whenever tax compliance work is provided as well.

Posted by: DukeUgrad | December 5, 2013 4:54 PM

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I don't think the IRS will win in appeals. Congress needs to pass a law giving the IRS the authority they need to regulate everyone who practices before the IRS. Preparing a tax return is one of the privileges of practicing before the IRS.

Just as CPAs have a code of ethics as members of the AICPA, Enrolled Agents have a code of ethics as members of the National Association of Enrolled Agents and the California Society of Enrolled Agents.

As for why an EA would also become a RTRP, I met a CPA who also became an EA and a RTRP. He said that he became an EA because he wanted the ability to represent his clients who resided in a state other that the state he was licensed in. He became a RTRP, because he felt that the IRS was going to promote the RTRP designation more that the EA designation.

An to all, it isn't Obama, it is President Obama. How do you expect respect as a tax professional, if you don't respect the office!

Posted by: NormanMGolden | December 5, 2013 4:52 PM

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Nobody is mentioning the Code of Professional Conduct and Statements on Standards for Tax Services (SSTS) that all CPAs who perform tax service are required to comply with.

Posted by: CWAustin | December 5, 2013 3:55 PM

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JFKEQUAL not sure I agree with your comments as to initals other than RRTP was I understand restricted to other than CPAs, lawyers and EAs as they were exempt from RRTP requirements other than the continuing ed that piggybacks on their existing cpe/clr requirements. I may be a bit biased as to using GED as sometimes I add "A.Sc., B.Sc., J.D., CPA (retired), Lawyer (retired)" fter my name if it adds anything to the message.

Posted by: BrianL | December 5, 2013 1:18 PM

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The RRTP program is the result of market protection of CPAs, lawyers and EAs and nothing more. Any realistic lawyer or CPA will admit neither profession requires any tax knowledge education in tax continuing or otherwise. As a retired CPA and lawyer, I have personal knowledge of this. The excuse that they are regulated by the State is not meaningful as to knowledge. And, there is an issue with State registrations as more and more requirements as to multi-state filings build. What is more practical, though I am not championing it is a multi-state uniform tax system and reciprocal agreements. The RRTP is not an answer to the larger problem, nor even the beginning of the solution.

As a tax person situated in a foreign country, I am seeing the results of the regulating of preparers in a different context. With the requirements, many foreign firms found that this part of their practice, never a big profit segment presented too many problems as to employees, registrations, testing and servicing taxpayers. Add that to the State licensing requirements that are at best confusing and at minimum, problematic as they never know in advance what State returns they will have added to the problem. Many firms are offloading this service as not fitting any longer in their practice because of the complexity and not the lack of actual tax knowledge. This means many taxpayers are shut out of tax services at a time when the US has declared war on them through a maze of extremely complex tax laws. This two initiatives conflict with each other materially.

Lastly, there are politics involved with this. Prior to Obama, Treasury recognized it did not have the authority to enact this program and sought Congressional permission to enact it only to never receive it. After Obama was elected, suddenly Treasury decided it had the authority I suspect knowing the Democrats bouyed by the President would simply bypass the requirement of a Congressional mandate and unilaterally extend its powers.

Support by organizations representing CPAs, lawyers and, EAs are only self-serving and should be discounted and noticed that the positions are biased and self-serving.

Posted by: BrianL | December 5, 2013 1:10 PM

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Piggybacking on the comment "too much is being made of the RTRP and the public may be misled by the word 'registered'", I agree but we have EAs tacking on the RTRP along with their EA, "EA, RTRP".... Consider the PhD who now takes the GED and receives a passing grade on the GED.... How does the letterhead, Jock Strap Smith, PhD,GED grab you??? I do not understand an EA salivating over the RTRP included. But what do I know???

I do see a need for the RTRP, i.e. testing for a 'tax preparer' and the need for continuing education. The Congress, and Executive Branch just love to rejigger the tax code, attempt to laughingly make the changes 'revenue neutral', and the joke of each tax season 'Paperwork Simplification.' J. F. Kerner, MSPA, EA... TAXNOW LLC, Pataskala (Columbus) Ohio

Posted by: JFKEQUAL | December 5, 2013 12:20 PM

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While I can't speak for attorney's CPA's should be given a pass. The above commentators do not understand or know that the CPA must have a minimum of 24 hours over a 3 year period in tax related updates. The state societies and accountancy boards are vigilent in making sure CPA's are up-to-date on current tax laws.

Posted by: guycpa | December 5, 2013 10:53 AM

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As a RTRP who works with the CPA husband, our tax office is completive, lively and a tax office for all . . . He is old-schooled and his clients are trust fund babies, shelters and heirs. He attends one tax class a year. My NATP membership schools him more than his CE classes on tax preparation.

He dislikes the arguments and that societal changes come through tax code. As 'the CPA' he is comfortable with rules, restrictions and it has always been this way. As the RTRP, I, enjoy the argument and challenge that all taxpayers deserve access to a preparer that will provide them tax service to reduce their tax burden to the lowest/legal possible tax.

There is business for all, and EA, CPAs and Attorneys should take an exam; many would not pass.

Posted by: donnal | December 5, 2013 10:52 AM

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Considering that an accountant is only required to do six hours of tax education in the course of an MBA education, the CPA who gets a free pass, confirms the fact that many lawyers and CPA's who prepare taxes are not as qualified as some RTRP.

Posted by: Injineer | December 4, 2013 7:34 PM

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I don't disagree with RTRP however I don't think lawyers and cpas should get a free pass. There are many lawyers, for example, who prepare taxes that are not qualified to so.

Posted by: jer1010 | December 4, 2013 3:43 PM

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