Friday, September 30, 2011
Lawyer Darrin T Mish has provided an update of the new PTIM procedures in “Tax Preparers To Be Fingerprinted By IRS” at his IRS PROBLEM SOLVER BLOG.
In discussing the fingerprinting process he says –
“Attorneys, CPAs, enrolled agents, enrolled retirement plan agent and enrolled actuaries are not likely to be required to be fingerprinted. But they must declare whether they have been convicted in a felony the last 10 years. This is one of the standard questions in the PTIN application.”
Enough is enough!
It is bad enough that attorneys and CPAs are exempt from the initial proficiency test and required CPE in federal taxation, allegedly because they have already passed tests (with little if anything to do with 1040s) and are already required to take CPE (but not in federal taxation). But if I have to waste my time and drag myself to some supposed central location and be fingerprinted in order to continue to make a living why not attorneys and CPAs who want to prepare 1040s?
And conversely, if the IRS is willing to take the word of someone with initials already after their name that they have not been convicted of a felony in the past 10 years why is my word not just as good?
Why this fingerprinting in the first place? Registration is good, but this is going overboard. Fingerprinting has nothing to do with verifying one’s ability to prepare 1040s.
EA’s were not fingerprinted when they applied for the designation (according to an EA). I do not believe CPAs or attorneys are fingerprinted before being awarded their initials (if I am wrong, please tell me). I don’t know if engineers or architects or doctors are fingerprinted as part of their regulation regime, but I doubt it very much. I do know that EROs (Electronic Return Originators) were fingerprinted, which is also ridiculous.
It is my understanding that the fingerprinting is solely for the purpose of doing the “background check”. The fingerprint record will be destroyed once this has been processed, and not kept in a permanent data base. This better be true!
The proficiency exams will begin soon, and I must pass it by 2013. I am not rushing out to be among the first to be tested. I will wait until they are sure that it works properly.
To be perfectly honest, I am secretly hoping that there will be so many problems with administering the test that the IRS will rethink its position and decide to do some kind of “grandfathering”.
Also exempt from the proficiency test are supervised employees of attorneys, CPAs, or EAs employed by a law firm, CPA firm, or other recognized firm, who prepare but do not sign, and are not required to sign, federal 1040s (and 1040As). These are the “underlings” of CPA and legal firms who actually do all or most of the work but do not sign the return so the client thinks a CPA or lawyer prepared the return and will pay the excessive fee.
These employees have not passed the CPA exam or the Bar exam (not that they are anh test of 1040 knowledge). There is no proof, via the testing that is required of me, that they know their arse from a hole in the ground about federal income taxes. So why are they exempt?
First of all there should be grandfathering. For example, as I suggested in my letter to the IRS on the subject back in the summer of 2009, “tax practitioners who have been preparing federal individual income tax returns consistently for five years (60 months), who have earned 50 hours of Continuing Professional Education credit in Individual Income Taxation in the two year (24 month) period prior to registration, and who are not currently prohibited from preparing federal income tax returns because of past bad acts will be exempt from taking the initial proficiency examination.” This is merely my suggestion. The look-back period and accumulated CPE could be different.
Second, ALL individuals who are required to have a PTIN – basically all individuals who want to prepare 1040s (and 1040As) for a fee – except Eas would be required to take the proficiency test, unless exempt under grandfathering, and maintain 15 hours of CPE in federal income tax annually. This includes CPAs and attorneys and supervised employees. Enrolled Agents would be exempt because they have already passed a more extensive test in federal taxation and have annual federal taxation CPE requirements in excess of the RTRP. CPAs and attorneys who pass the test, or are grandfathered, and maintain the CPE will be endowed with the additional initials RTRP (i.e. John Doe, CPA, RTRP). Only RTRPs and EAs will be allowed to prepare federal individual income tax returns for a fee.