Thursday, June 5, 2014


Jeff Stimpson of ACCOUNTING TODAY recently asked tax professionals “Was the RTRP Worth It?”.

Most of those who responded supported the mandatory IRS RTRP program, feeling regulation is needed to “better oversee scamming preparers”.

How many times must I say this?  Licensing tax return preparers will not stop tax fraud!  Dishonest taxpayers will always find dishonest preparers, and vice versa.  Requiring all tax preparers to become RTRPs would just push dishonest preparers further underground, issuing alleged “self-prepared” returns. 

And a simple competency test will not weed out incompetent preparers.  As fellow NATP member, and CPA, Marilyn Ayers, chairperson of the NJ chapter, commented in response to my recent post to a Facebook group –

I think testing is ridiculous considering the changes to the tax code every year. Testing means you know it today - that's it.”

The only thing that will make any dent in incompetence by otherwise honest preparers is mandatory CPE in taxation.   

CPAs are licensed, but that does not stop CPAs from preparing fraudulent returns.  I hate to sound like a broken record, but the Enron tax scandal, which was probably the initial cause of the call for regulation of tax preparers, involved CPA-prepared tax returns.

An excellent comment on the subject of a mandatory vs voluntary certification in the ACCOUNTING TODAY piece came from CPA John Stancil from Lakeland FL -

CPAs and EAs worked to achieve a voluntary certification. They take pride in their certification and are, by and large, diligent in maintaining competence. A forced certification won’t carry the pride of one voluntarily achieved. Many preparers forced to become RTRPs would have done the minimum to remain qualified.”

Linda Burney Fuhr of Lewisville, Texas-based Owen Lyon & Associates, an EA for 28 years and for 12 years a non-CPA partner at a CPA firm, told Jeff - “If my plumber, my manicurist and my childcare provider must all obtain some sort of licensing and demonstrate minimal competency in their fields, why should my tax preparer be any different?

The comment “if my barber needs a license why not my tax preparer” is also frequently quoted when calling for mandatory licensure.    

It is different, Linda.  An incompetent plumber, electrician, or any other type of contractor can cause serious damage to property, which could in turn result in serious injury, permanent disability, or loss of life.  An incompetent barber can cut off a customer’s ear.  An incompetent child care provider can cause illness or injury, either physical, mental, or emotional, disability, or death.  These types of professions and trades need regulation. 

What does a tax preparer do?  He/she assists a person in preparing a government form.  Is a tax preparer any different from someone who assists parents and students in preparing the FAFSA form or someone who assists potential homeowners in preparing federally-backed mortgage applications?  The most an incompetent tax preparer can do is to cause a taxpayer to pay more, or less, taxes than necessary and perhaps pay interest and penalties if errors are discovered.

Tax preparers have been around for 100 years without mandatory licensure, and the government, and our tax system, has survived.

If there are more errors, incompetence or fraud in today’s tax returns the blame falls clearly on the idiots in Congress for making the current Tax Code such a convoluted mucking fess.

The bottom line – if the IRS does not institute a voluntary RTRP program, either one or two-tiered, and “grandfather” all who earned the title under the mandatory program, those who studied for and sat for the initial competency test wasted a lot of time and money for nothing. 

Creating a voluntary 1040-preparer designation will not reduce tax fraud.  But it will give the taxpayer public an indication of just who, besides an Enrolled Agent, is qualified and competent in the preparation of individual tax returns.


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