Wednesday, June 20, 2012


I just don’t want to have to take the new RTRP initial competency test.

I have been preparing 1040s for compensation since February of 1972 – and just completed my 41st tax filing season.

I can count on the fingers of both hands the total number of face-to-face, sit down IRS audits I have had to attend – out of the probably 10,000+ federal individual income tax returns I have prepared over the years.  And more than half ended in “no change”.

I have never been charged a preparer penalty, nor have I ever been reviewed, warned, visited, or “chastised” by the IRS.

I never had an income tax course in college, and have no “formal” training in 1040 preparation.  I learned how to prepare 1040s the best way possible, by actually preparing 1040s (and 1040As) by hand.  On my first day of work back in 1972 my employer gave me a copy of a client’s prior year’s return and a briefcase with the current year’s “stuff” and told me to “jump in and swim”. 

I did take and pass a “correspondence course” on 1040 preparation in the mid-1970s, from I think the National Tax Training School, solely to establish an educational qualification.

Each and every year for the past 25+ years I have averaged at least 24 “hours” (1 hour = 50 minutes) of continuing professional education in federal and state income taxation.  Actually the average is probably more like 32 hours.

In 41 tax seasons I have never used flawed and expensive tax preparation software to prepare a federal income tax return.  Each year I do about 400 sets of returns the “old fashioned way” – by hand. 

As a result, when I identified myself at a CPE class several years ago as the only person in the room of tax pros who still did returns by hand the seminar leader, former IRS Director of National Public Liaison, and at the time Executive Director of the National Society of Tax Professionals, Beanna J. Whitlock shook my hand and announced that I was the only one in the room who really knew how to prepare tax returns.

Why should I, after 41 seasons of preparing 1040s for a fee without incident, have to take a test to prove that I know what I have been doing all these years?

Having to take such a test is even more distasteful when CPAs and attorneys, who may have never even looked at a 1040 other then their own (and then only to sign it), get a free pass.  No test requirement and no need to take CPE in taxation.  A CPA who just become certified last week does not have to prove competency in taxation to prepare 1040s for compensation, but after 40+ years of experience I do.

I am not perfect.  Like anyone I make mistakes, and occasionally I make mistakes on 1040s.  In the history of the US Tax Code there has NEVER been a paid preparer who has NEVER made a mistake.  The complexity of the Code and the workload demands of the limited filing season make it literally impossible for a paid preparer to complete a perfect tax return every time.

And I am not writing this to say, “Look at me – I am the best tax preparer in the country.  I, alone, should be exempt from taking a competency test”. 

There are many, many, many, many long-time “previously unenrolled” paid tax preparers out there with a similar story who should not be made to “prove themselves” in this way.

I am not saying years in the business automatically equals competency (just as having the initials CPA does not automatically mean the person knows his/her arse from a hole in the ground about preparing 1040s).  There are preparers who have been around for 3 or 4 decades who are not sufficiently competent and current in today’s tax law.  My formula for “grandfathering” is years of experience + proof of extensive ongoing professional education. 

I would exempt from the initial competency test all paid return preparers who have consistently been preparing 1040s full time (I mean during the tax season – not 40 hours a week all year round) for at least 5 full years (60 months), and who have earned a minimum of 50 hours of CPE in federal income taxation topics during the 3 years (36 months) prior to initial registration.

Now honestly – do you think I should be forced to take the IRS initial competency test to continue to make a living in my chosen profession?


1 comment:

  1. RDF:

    I sympathize, but only to a point.

    I too learned how to prepare returns manually; believe it or not, the U.S. Army taught me the ins and outs of tax preparation as a lieutenant in a 40-hour class so I could help the troops prepare returns. I decided to do it for pay after preparing multiple returns in Saudi Arabia after Operation Desert Storm in 1991 A colonel commented that the return I did for him was better organized and resulted in a higher refund than the one he had done by a CPA in the previous year, and HE suggested that I do it for pay. After taking the same correspondence course you took, I hung out my shingle and, at least initially, did the returns by hand.

    Unlike you, after a time, I decided to use tax software, but I did NOT depend on it, because such software is written by human beings and this cannot be 100% accurate. But I do not deny that the tax software sometimes identifies issues that I did not consider or, being over-worked in tax season, simply forgot.

    Further, since the IRS now demands electronic filing electronically, I do not see HOW you avoid using it.

    That said, the RTRP exam, however flawed, is IMHO LONG OVERDUE. I took the exam last December and passed with minimal study (mostly in processes associated with electronic filing). Like you implied, if you DO, you KNOW. If NOT, you DON'T know.

    However, many of my competitors who are little more than data entry workers into that same tax software will NOT find the task so easy, and (hopefully) they will either learn what you and I already know or they will be prevented from preparing tax returns for pay.

    If the net result is less gross incompetence in the tax field and a better, more knowledgeable field of tax professionals, being required to take the occasional exam and enroll in some annual CPE courses is a SMALL price to pay IMHO!