Enrolled Agent, and fellow tax blogger, Jason Dinesen of Iowa has responded to the recommendations I offered in “My Letter to Carol Campbell” in a post titled “RTRPs, CPAs, Attorneys and Grandfathering” at his excellent blog DINESEN TAX, INC, formerly known as DINESEN TAX TIMES.
He takes on two of my recommendations -
“Many, if not most, RTRPs and enrolled agents seem to believe that CPAs and attorneys should be required to take the RTRP exam in order to prepare tax returns.
I am open to Robert Flach’s idea of grandfathering unlicensed tax preparers such as himself, who can demonstrate a certain amount of experience and a certain amount of continuing education.
I am not open to the idea of requiring a CPA or an attorney to take the RTRP exam.”
“I agree completely that it’s wrong for the public to automatically assume that CPA equals ‘tax expert’. As an enrolled agent, I am as annoyed as anyone over that misconception.
But forcing a CPA or an attorney to take an open-book exam over basic tax law would be insulting to CPAs and attorneys.”
CPAs have been insulting EAs and competent previously unenrolled preparers for years by perpetuating the “urban tax myth” that CPAs are the only tax experts and that CPAs “own” the area of taxation.
Fellow blogger Marilyn Lawver, who just happens to be a CPA, wrote the following in a blog post a few years back (the highlight is mine) –
“Robert is correct that a CPA is not specifically licensed for tax preparation, rather ‘a CPA is a licensed accountant, authorized to certify audits of financial statements’. Just a couple of months ago, I was pondering this exact issue. I was thinking about all the fancy credentials the AICPA offers for CPAs in other specialties - financial planning, fraud examination, business valuation - and wondering how to become a certified tax expert.
So I emailed the AICPA asking about it. Here's the exact wording of the response I received:
’We do not offer a credential in taxation. In general, our approach has been not to develop credential programs around areas for which the public already believes CPAs to 'own'. In addition, we do not endorse a particular tax credential.’”
Exempting CPAs from proving competence or remaining current (they are also exempt from required CPE in federal taxation) in 1040 preparation continues to perpetuate this “urban tax myth”.
I do agree with Jason that CPAs and attorneys “have already passed much, much more rigorous tests”. There is no doubt that the CPA and bar exams are much more extensive and difficult than the RTRP competency exam (as is the Special Enrollment Exam for EAs). But the CPA and bar exams have nothing to do (or at most only minimal to do) with 1040 preparation. I expect that an engineer or architect must also take a rigorous test to be licensed, but would you want an engineer or architect preparing your tax return?
Jason goes on to say – “And anyway, what would it prove? The RTRP exam is an open-book test over basic tax law.” And he explains that the RTRP test is “a test over basic tax law – it’s not designed to be a ‘tax expert’ test”.
That is not the issue. Regardless of whether there is any real value to requiring the test of anyone, the issue is that the Internal Revenue Service wants anyone who intends to prepare more than a minimal number of tax returns for compensation to demonstrate some degree of competence in federal 1040 tax law. By exempting CPAs and attorneys from this test the Service is saying that the CPA and bar exams are tests of competence in 1040 preparation – which is just not true.
It is true, as Jason points out, that CPAs and attorneys are “held to ethical standards by their state boards, and I believe one of those standards is to not practice in an area in which they don’t have knowledge.” But professional ethical standards did not prevent Enron or other CPA or attorney created tax fraud. And the ethical standards of doctors and other professionals do not prevent malpractice.
Does Jason also believe that CPAs and attorneys should be exempt from required CPE in taxation because they are already required to maintain CPE (although none of the required CPE has to be in taxation) to maintain their current designation?
Talking about “insulting” CPAs and attorneys – I believe it is an insult to someone like me, who has been preparing 1040s without incident for 40 years and who has maintained an average of 20+ hours per year in CPE in federal taxation for at least the past 25 years, to be forced to take a test to prove that I know what I have been doing all these years.
Jason promises “more to come in future blog posts”. I look forward to his future posts on the subject, and to a continued debate on this subject.
The floor is open for discussion.