Saturday, January 19, 2013


As expected, even though it is a Saturday the tax blogosphere was a-BUZZ with the word that the court has closed down the IRS tax preparer regulation regime.

Joe Kristan is as expected, a pig in reality tv over the court decision.

I am glad that the IRS lost in court.  I have hoped the regulations would be overturned, and I thought they should be illegal, but I am not a master of the law covering IRS regulatory problems.  Regardless of whether they are legal, I have always thought the regulations unwise.”

Russ Fox reports the death of regulation (for now) and suggests the unthinkable – that the idiots in Congress might legislate regulation -

While the IRS is certain to appeal, it appears that the RTRP program is dead (at least for now). It will likely take an act of Congress to expand the IRS’s regulatory power to unenrolled preparers. And that’s not likely to happen in the current Congress.”

There was also a lively discussion on various aspects of the regulation regime on Twitter.

“Of course it’s necessary {CPE for tax pros – rdf}!  This stuff changes every year! If you don’t stay educated don’t call yourself a tax pro. Tax specific CPE should be required from attorneys & CPAs as well. A JD does not endow you with perpetual tax knowledge.” - Mariette Knoblauch, CPA

“CPE requirements are a Must! Sadly, there so called tax pros who don't even have basic fundamental knowledge of tax prep.

The exam is useless. I would much prefer an independent Org to administer required CPE's for unlicensed preparers.” - Alex P. Louis, EA

There's another option - voluntary certification (rather than regulation) by either the IRS or an independent group.” - Dan Alban

And no monopoly to one for-profit company. Resent being forced to give $ to Prometric.” – Mariette Knoblauch, CPA.

A follow-up “tweet” from Dan led me to a September 2012 quote from Chuck McCabe, chief executive of Richmond, Va.-based Peoples Income Tax and The Income Tax School -

The new requirements will cause an exodus of tax preparers, who will stop practicing rather than take the test and complete annual education

How many times must I say that CPE is not an excessive or prohibitive requirement – it is a basic and very necessary cost of doing business, regardless of whether or not it is required! 

NATP offers two days, 16 hours, of CPE, which includes the 3 hours of updates and 2 hours of ethics, at many locations throughout the US (so there is no need to incur costs for travel or lodging) in November-January.  The cost of the 2 days for 2012 was $349.  I expect other providers offer less expensive alternatives.  So if that is $3.50 per return if spread over 100, $1.75 if spread over 200, or a little over $1.00 for 300 clients.     

I cannot see anyone who is making a good living as a tax preparer leaving the business because of a $64.00 annual fee and a one-time test. 

The problem of forcing preparers out of business comes from the IRS insisting on not postponing the deadline for testing with over 300,000 PTIN-holders who have to sit for it, or its insistence on not allowing grandfathering.  While I do not want to waste time and money on the test if I do not have to, I will take it if the alternative is giving up my business. 

Dan also “tweeted” –

It is expensive. Taking CPE classes is not the only way to stay up-to-date on IRS regs. Many people learn better from reading.”

This is true – self-study.  But there are options available to receive credit for self-study.

Trish McIntire joined me in shooting down the argument that the cost of regulation would in itself force serious preparers out of business in her post “Licensing Pity Party” (highlights are mine) -

This lawsuit involved three tax preparers who claimed in part that the costs of the new tax preparer regulations will force them to stop preparing returns. Bovine excrement! The preparer costs are a onetime testing fee of $116, an annual PTIN registration of $64.25 and the costs of 15 hours of continuing education. How much does the CPE requirement cost? That depends on the courses used. In 2012, I paid $428.50 for 32 hours of course work. That averages to $13.39 an hour. I could have spent less. I’ve seen free CPE and companies that offer packages under $10 an hour. I’ve also spent more for special courses I wanted to take. But working from an average of $15 an hour for 15 hours equal $225 a year for continuing education. So the plaintiffs in Loving vs. the IRS contend that a onetime cost of $116 and an annual cost of about $300 will force them out of the tax prep business. Sorry, but if your business can’t survive a $300 expenses (which can be passed on to clients) then you should really consider not being in that business. Sorry!

But should the continuing education cost really be a new expense for any tax preparation business? How do the plaintiffs and thousands of others prepare for the tax season? How do they keep up with law changes and paperwork requirements?

I understand filing this lawsuit under strict libertarian principles. But part of the judge’s ruling is that this law will cause “irreparable injury” because 2 of the plaintiffs would have to close their businesses. Closing a business for $300 a year plus a onetime testing fee is bogus. Especially when some of the $300 should have been expenses the business was already paying.”

So what do you think?


1 comment:

  1. You can get on-line CE for less than $50.00. Not my style but it is out there. This is another hit for the tax payer who will pay an unqualified person to file their taxes. Crazyness.