Tuesday, July 10, 2012


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.


1 comment:

  1. 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.