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?