Thursday, May 29, 2014


Click here to read NAEA President Lonnie Gary, EA’s May 23rd letter to IRS Commissioner Koskinen about the IRS proposed voluntary annual return preparer certificate program.

It appears that the main objection of NAEA to the current IRS proposal is the replacement of the original initial competency test used in the pre-Loving mandatory RTRP program with a “50-question ‘knowledge based comprehension test’ to be created by individual CE providers”.

It goes on to say -

CE by itself, even in combination with a ‘knowledge based comprehension test’, fails to provide a taxpayer with any assurance that the person preparing his or her return is even minimally competent to do so.”

Unlike the AICPA, the NAEA apparently does support a voluntary designation program.  The letter suggests –

In the alternative, IRS should consider a voluntary RTRP program. That program has been vetted thoroughly and has industry buy-in and the minimum level of rigor necessary to pass muster.”

In my opinion, required CE “by itself” does not fail to provide a taxpayer with assurance as to a preparer’s competence.  I believe that the annual CPE requirement is of more value than any initial competency test. Taking mandatory CPE in taxation suggests that the preparer remains current with the constant changes to the Tax Code.  Considering these constant changes, the initial competency test an applicant passes today may be at least partially obsolete a few years down the road.

The original “initial competency test” given under the mandatory RTRP licensing program was considered by many to be too easy – especially since it was “open book”.  

I agree that if there is going to be an initial competency test it should be "meaty".  My proposal for a two-tiered voluntary designation program, combining an RTRP and an EA component (see “What the IRS Should Do About the RTRP"), would call for a more extensive initial test, with a grandfather exception for experienced preparers who have taken CPE continually over the years.  The current Special Enrollment Exam for Enrolled Agents would be cut in two – with RTRP-level candidates (tier one) required to pass the portion of the SEE that applies to general 1040 preparation, and the EA-level candidates (tier two) required to pass the portions of the SEE dealing with more involved 1040 issues, entity taxes, and client representation.

What do you think?


No comments: