Monday, January 21, 2013


As you know, the US District Court has, at least temporarily, shot down the IRS tax preparer regulation regime. 

Let me offer a starting point for a discussion on “voluntary” tax preparer certification via an independent National Institute of Registered Tax Return Preparers.

I use the designation of “Registered Tax Return Preparer” only as a convenience and for comparison to the recently stuck down regulation regime.  The name could very well be “Certified Tax Return Preparer” or something else.

All individuals who prepare 10 or more tax returns for compensation would be required to register with the Internal Revenue Service and receive a PTIN (Preparer Tax Identification Number).  The only requirements for registration are that the individual has not been convicted of a financial-related felony within the past 10 years, and he/she is current with 1040 filings (but not payments).  There will be no charge for the initial registration, or at most a nominal $25 registration fee.  So that this registry remains current, PTIN-holders must renew their registration every 5 years.  There will be no further requirements, or charge, for renewal.  This will be the extent of IRS “regulation” of “unenrolled” preparers, other than as previously provided in Circular 230 (prior to the initiation of the regulation regime).

PTIN-holders can voluntarily elect to apply with the National Institute for Registered Tax Return Preparers for the designation of Registered Tax Return Preparer (RTRP). 

The Institute will be an independent non-profit organization established solely for the purpose of issuing, maintaining, and promoting the RTRP designation.  Its governing board will consist of a representative, perhaps the Executive Director or Board President, of the National Association of Tax Professionals, the National Society of Tax Professionals, the National Society of Accountants, the American Institute of Certified Public Accountants, the American Bar Association, and any other appropriate tax-related membership organization, a high-ranking representative of the Internal Revenue Service, and at least two “previously unenrolled” practicing tax professionals.

In order to be designated as a RTRP, a candidate must possess a valid PTIN and pass a competency test on federal 1040 tax law.  A “grandfathering exemption” from this test will be allowed for –

·      Tax professionals who have been consistently preparing federal income tax returns on at least a half-time basis (during the traditional tax filing season) for at least five (5) full years AND who have successfully completed a total of 48 hours of continuing professional education (CPE) in federal taxation in the 3-year period (36 months) prior to applying for the designation.

·      Tax professionals who have been licensed or certified to prepare income tax returns under a required state program that includes a competency test.

·      Individuals who have successfully completed a certificate or certification program in federal income taxation offered by a qualified educational institution or qualified membership organization that includes testing.
The "grandfathering" period for applicants shall last for the first three (3) years of the program.

RTRPs must renew their designation every three (3) years by submitting proof of completion of a total of 48 hours of CPE in federal taxation during the three-year period, with at least 8 hours each year.  The 48 hours must include three (3) hours of “tax updates” per year (a total of 9 hours) and one (1) hour of “ethics update” within the three-year period.   

There have been many attempts at voluntary certification of tax return preparers – creating a designation for tax preparers (Certified Tax Preparer, Chartered Tax Preparer, etc) – over the years.  But none have been successful because they were offered and maintained by individual membership or CPE organizations and were not universally accepted by the industry.  Creating a National Institute of RTRPs, with representatives of all industry “players” to maintain the designation, should correct this.

What do you think?



  1. So, how do we get this started. How do we get the "players" involved?

    I am all for it. Where do I sign up?

  2. I have found, after taking numerous licensing exams over the years, that those for which the exam was essential to be licensed, the exam typically asked irrelevant questions on irrelevant garbage (real estate salespersons and brokers exams, stockbroker exams--"which Act made insider trading illegal? 1933 Act or the 1934 Act?"--and life and disability exams). Those exams that were voluntary in the sense that you aren't required to pass the exam in order to do most of the things the license allows typically ask reasonable questions in areas that would actually be somewhat useful, including both the EA and CFP exams.

  3. Okay Robert, here are my thoughts.

  4. GG-

    The Enrolled Agent can represent taxpayers before the IRS - they can "practice" before the IRS.

    The voluntary RTRP, or whatever, would not be able to "practice" before the IRS, just as the IRS regulagted RTRP could not.


  5. So where do the people fit in who have already met the RTRP requirements? (paid for the PTIN, paid for and passed the test, paid for and received CPE's)

  6. Z-

    The PTIN requirement has not been stopped. That remains. As for the RTRP designation, I expect if the decision stands it will be a useless designation and wasted money.

    In my voluntary certification program, those who had passed the IRS competency test and been designated RTRP would be "grandfathered" into the system.


  7. I have spent several months studying to take RTRP exam so I could have a credential to use when I offer to prepare individual 1040's. I was to take the exam tomorrow but the testing has been closed down, and now I'm left hanging with tax season about to start. Since I am supervised by a CPA, I wasn't even required to become a RTRP, but I would have been able to show that I had some minimum competency.

    1. Buy an EA study guide and build off what you already know.

    2. I agree. Become an EA, instead. You've already built up some knowledge, so it shouldn't be a much bigger hurdle. And who knows? You may end up with a larger base of knowledge that will help you.

      Am I the only one who kind of agrees with the IRS, here? I know that 99% of tax preparers are intelligent about taxes, do the best work they can on tax returns, and are basically honest. It's the other 1% that bothers the IRS. The dog groomer who does taxes on the side seems to be Nina Olsen's favorite. In the mid-90's, I once drove by a billboard in Atlanta for a car dealership that would do your tax return for free and let you use the anticipated refund as a down payment. The IRS just wants to be sure that these 'tax preparers' can understand the tax return they're charging money to prepare, and not just blindly typing numbers into tax software.

    3. As a long-time preparer (43 years) and having worked for CPA firms and tax departments of law firms also holding both a BSBA and A MAFM in accounting I think the IRS requirement to regulate the tax preparation industry is needed. There should be a basic test and education requirement. Due to personal circumstances I do not have either a CPA or Ea license. The RTRP is a good start that should be regulated into an accounting/finance degree and the EA as the lowest level to prepare and sign returns.

  8. personally most preparers are over prepping for the RTRP. a few months is all you need to freshen up for the SEE so you could become an EA.