I had
hoped to begin a serious discussion among professionals on my proposal for a
voluntary IRS-sponsored RTRP program. While
some intelligent and “on topic” comments were submitted, unfortunately the
discussion in the comments section soon got out of control, devolving into a
totally unrelated “mucking fess”. I must
accept some of the blame for this “devolution”, as I, myself, mistakenly went
off on a tangent in a couple of my early comment responses.
I would
like to use this post to address some of the intelligent “on topic” comments
that were submitted.
·
I
agree that, going forward, the Internal Revenue Service should not
be permitted to charge tax preparers a fee for renewing their PTIN.
And now
that there are no requirements for maintaining one’s PTIN there should be no
more annual renewal. Perhaps the PTIN
should be renewed every 3 or 5 years, with no fee, so that those who have
retired, no longer prepare 1040s for compensation, or have gone to their final
audit can be removed from the registry.
I
originally obtained my PTIN years before the institution of the Service’s
mandatory RTRP regulation regime. It was
originally offered to tax preparers as an alternative to using their Social
Security number as identification when signing tax returns. I paid no fee for applying for my PTIN, and I
was not required to apply for renewal annually.
The
Internal Revenue Service does not charge for applying for an Employer
Identification Number (EIN) or an Individual Taxpayer Identification Number (ITIN),
and the Social Security Administration does not charge for applying for a
Social Security Number.
If the
IRS continues the RTRP designation as a voluntary program the costs of this
program should be covered by an appropriate RTRP application and renewal
fee. The PTIN application and renewal
should not be used to raise funds for the voluntary RTRP program.
As for
the fee collected by the IRS for PTIN applications and renewals for 2011
through 2013, while at the time the fee may have been appropriate, since the purpose
of the fee was to fund the mandatory RTRP regulation regime, and that regime no
longer exists, once the Court has upheld the decision in Loving v IRS tax
preparers who paid this fee should be able to apply for and receive a refund.
If the
IRS decides not to continue the RTRP designation as a voluntary program, whether
in conjunction with its EA designation or not, I believe that those who were
forced to pay for taking the competency exam under the regulation regime should
also be able to apply for and receive a refund of the exam fee.
· While
I support the contention of the plaintiffs in Loving v IRS that the Internal
Revenue Service does not have the authority to institute a mandatory regulation
regime for all tax return preparers, and support the decision in Loving v IRS,
I do not agree that the cost of mandatory CPE for tax return preparers is “prohibitive”.
It
has always been my belief that if a
serious tax return preparer does not already take at least 15 hours of
continuing professional education in federal income tax topics, including 1040
updates, each year he/she certainly should be. It is vital for serious tax
preparers to keep up-to-date on the changes to the US Tax Code, Tax Court
decisions, and IRS rules and regulations – and verifiable CPE is the only way
to confirm that this is being done.
Any
voluntary certification program for tax return preparers must include mandatory
annual CPE.
My
only objection to mandatory annual CPE involves the requirement to sit through
2 hours of ethics preaching each and every year.
I
have said time and again - If I am a crooked tax preparer sitting through 2
hours of ethics preaching ain’t going to turn me honest!
At
most a voluntary designation program should require perhaps 2 hours in the
first year a person receives the RTRP, or whatever designation, and 1 hour of
updates every two or three years thereafter.
I
have found that, because of the 2-hour annual ethics preaching requirement for
EAs, CPAs, and other financial professionals, and for a while RTRPs, almost
every 1 or 2-day seminar or workshop, regardless of the main purpose or
topic(s) of the event, includes 2-hours of ethics. I have been told by some education providers
that they must include the 2-hours of ethics in the program in order to
maintain a profitable level of attendance.
So, as is true in my case, a tax pro is often forced to pay for and sit
through 4 or even 6 hours of ethics preaching in a year – a waste of time and
money!
If
there is any “required” expense of a tax preparation practice that could be
called “prohibitive” it is the cost of the initial purchase and annual updates
of tax preparation software. In order to
comply with the electronic filing mandate all paid tax preparers must purchase
flawed and expensive tax preparation software to be able to electronically file
1040s, unless the preparer can get all of his/her clients to “opt out”, as I do.
The
electronic filing mandate for paid tax preparers should be limited to those who
use tax preparation software, as is the case, surprisingly, with New York state
tax returns.
And,
to reprint one of my more appropriate comment responses from ACCOUNTING TODAY
-
·
I
agree that if there must be a "mandatory" regulation of all tax
return preparers, which I do not believe there should be, the Internal Revenue
Service should certainly not be the agency to administer this regulation. This
is one reason the Court was correct in shutting down the RTRP regulation regime.
However,
I do believe that the IRS can offer a "voluntary" secondary tax
professional designation in conjunction with the current Enrolled Agent
designation in the manner I have discussed in my editorial.
Along
these lines, I do not believe the IRS should have to approve individual CPE
providers in order for their individual education programs be accepted as
satisfying the CPE requirement, as had been the case in its RTRP regulation
regime. The current method for accreditation of CPE providers is sufficient.
I
still believe that the absolute best option for administering either a
mandatory or voluntary certification program is an independent industry-based
organization.
·
I
do not mean to imply that the RTRP competency test was a "walk in the park".
It obviously required study and preparation and knowledge of the Tax Code.
However, because passing the test was required of all "previously
unenrolled" tax preparers it had to be basic and general enough for all
serious and experienced tax preparers to be able to pass it in one or two
tries.
The
Enrolled Agent "Special Enrollment Examination" is certainly
substantially more difficult and comprehensive than the RTRP competency test.
Its purpose is to certify a higher level of tax knowledge and competence and
not to prevent individuals who do not pass from preparing 1040s. If the
voluntary RTRP designation is to be part of a two-tiered program partnered with
the EA designation the required examination must be more demanding to maintain
the integrity of the EA component.
Perhaps
the current Special Enrollment Examination could be divided in two, with each
half enhanced. The RTRP portion would deal with 1040 preparation issues and the
EA portion would deal with more advanced preparation issues, and perhaps entity
taxation, and representation issues.
So
let the discussion continue. What do you
think about what I have said in this post?
At
least in this “venue” I can moderate the comments!
TAFN
