I
am in Baltimore attending the National Conference of the National Association
of Tax Professionals, held this year at the Baltimore Marriott Waterfront. See my post on the conference at THE WANDERING TAX PRO (and my afterthought).
The
Keynote Speaker at the opening ceremonies was David R Williams, Director of the
IRS Tax Preparer Office, who is in charge of the IRS new regulation regime.
David
began by telling us that the impetus behind the regulation of tax return
preparers is the fact that the Tax Gap has grown to $450 Billion. It is the hope of the IRS that improving the
quality of tax return preparers will result in more correct tax returns being
filed, and ultimately help to make a dent in this Tax Gap.
When
the regulation regime officially kicked off last year there were almost 848,000
PTINs issued by the IRS. Only 715,000
renewed for calendar year 2012 – a loss of 133,000.
There
are currently 3,269 previously unenrolled tax professionals who have taken and
passed the initial competency test to receive the new RTRP (Registered Tax
Return Preparer) designation. This
leaves almost 339,000 RTRP “candidates” – previously unenrolled preparers who
need to take and pass the test by December 31, 2013 (I am in this number). That is a lot of tax preparers.
David
says that the IRS wants potential preparers to “demonstrate basic competency”,
by passing a test and maintaining minimal annual CPE in taxation, before being
allowed to prepare 1040s for compensation.
This is a bold-faced lie!
The
IRS has no interest in being sure that all preparers “demonstrate basic competency”
- because about 300,000 of the 715,000 current PTIN holders do not have to
demonstrate any competency and do
not have to remain current by taking annual CPE in taxation. I am, of course, talking about the CPAs,
attorneys, and “supervised employees” who are exempt from the test and CPE
requirements.
David
does not address this serious issue – quickly glossing over it by implying that
CPAs and attorneys demonstrate competency by virtue of having taken the CPA and
bar exams – another bold faced lie.
David
stated in his presentation that the IRS does not plan to extend the 12/31/13
deadline for passing the RTRP test. He
also says it is not the intention of the IRS to take away the ability to make a
living from previously unenrolled preparers – but will the IRS do this when the
deadline passes and 100,000 or so RTRP “candidates” have still not taken and
passed the test?
I
wonder if the 339,000 “candidates” have not taken the test yet because they
want to make sure the IRS gets all the “bugs” out before doing so, or if they
are waiting in hopes that the IRS will eventually embrace common sense and
provide some kind of “grandfathering” – both good reasons for procrastination
in this matter, and both reasons why I have not yet sat for the test.
David
told us that CPE requirements will be enforced for RTRPs, and RTRP candidates,
for calendar year 2012. The IRS has
arranged for authorized CPE providers to provide information, based on PTINS,
directly to the IRS – so at renewal time required CPE can be automatically
verified. There will, no doubt, be some
glitches (i.e. CPE taken in December may not be uploaded in time) and tax
professionals will be able to “attest” to their 2012 CPE, without immediate IRS
verification, when renewing their PTIN for 2013.
He
also put our minds at ease by affirming that fingerprinting of PTIN holders has
been put on indefinite hold while the IRS investigates alternate methods of
conducting “background checks”.
And
he announced that the IRS hopes to have a public online database of RTRPs
available after the 2013 tax filing season (when 2012 returns are prepared).
To
be honest - as I pointed out to an NATP staffer at the NJ-NATP luncheon on
Monday afternoon – with all its flaws I would rather have the IRS regulate tax
preparers as it currently does than have the idiots in Congress legislate regulation. As you know full well, the idiots in Congress
could “f**k up a High Mass”. And David
Williams is an excellent choice for Director of this process. He is intelligent and sincere. We certainly could have done much, much
worse.
However
the current regulation regime has serious problems with its refusal to
grandfather and its exemption of CPAs, attorneys, and “supervised employees”
from testing and CPE. We must continue
to publicize and criticize these gross inequities in the system.
RDF
I agree! The problem here is that those who are exempt may very well be incompent! Just because you are a CPA or Attorney does not make you tax knowledgeable. I did take the exam this past week and did pass. I used the NATP Exam Review which proved to be quite helpful.
ReplyDelete