Wednesday, June 4, 2014


Fellow tax blogger Jason Dinesen, and Enrolled Agent (EA) gives us “Yet Another Post About Regulation of Tax Preparers” in response to the recent NAEA letter to the IRS written, according to Jason’s post, “in opposition to the proposed voluntary system”. 

As I understand it, the NAEA does not oppose a voluntary certification program, but has some concerns with the Service’s current proposal.  At the end the letter suggests “IRS should consider a voluntary RTRP program.”  

Two of Jason’s reasons for opposing a new voluntary, or mandatory, IRS-sponsored designation do have some merit –

1. Enrolled Agents would be pushed even further to the fringes of the tax world by any new IRS-mandated or IRS-blessed designation.

Unfortunately the IRS has never properly promoted, or properly recognized, the Enrolled Agent designation.  My proposal for an IRS-sponsored voluntary certification (see “What the IRS Should Do About the RTRP”) calls for two-tiers – a basic RTRP designation and an “Enrolled Tax Return Preparer” designation which would replace the current unfortunately named Enrolled Agent status.  I compare the RTRP to a Bachelors degree and the ERTP (or EA) to a Master’s Degree.

2. The IRS doesn’t need more things on its plate. It can’t handle the things it currently has on its plate. How would they successfully oversee some new designation?

I agree with this statement.  Having the IRS oversee the designation is not the best idea.  I have suggested that the voluntary RTRP-like designation be administered by an independent industry-based organization like an American Institute of Registered Tax Return Preparers (see “It's Time for Independent Certification for Tax Preparers").

Jason also opposes an RTRP certification because he feels “There is no compelling need for a new designation”.  Here I disagree.  Some of the reasons behind the IRS original attempt at a mandatory RTRP program were valid.  As I have pointed out many times any Tom, Dick or Harriet can hang out a shingle as a “tax preparer,” regardless of education or ability.  And, thanks to tax preparation software, any Tom, Dick or Harriet, with absolutely no training, experience or knowledge, can simply purchase a tax preparation software package and try to pass themselves off as a “tax professional”.  The taxpayer public does need a way to determine the relative competence of a potential tax preparer.

Jason’s solution is –

Promote the EA designation as the voluntary credential of choice for tax pros who aren’t currently licensed. Simple. Efficient.”  

I never became an Enrolled Agent because I had no desire to represent taxpayers before the IRS (other than to assist clients with audits of returns I have prepared).  There are many, many, many competent”unenrolled” tax preparers who are like me in this regard.  Enrolled Agents are authorized to represent taxpayers before the IRS, and in that context it is right for the IRS to regulate the EA designation.

As another aside of honesty – I really did not become aware of the Enrolled Agent designation until probably half-way into my current 43-season career.  If I had known about it when I first started out in the early 1970s I may well have elected to become an EA.  This in itself is an example of how the IRS has not properly promoted the designation.

There is a true need, and not just a “want”, for a voluntary certification program to recognize and identify the competence of currently unenrolled 1040 preparers.  Such a program would benefit the tax preparation industry, the taxpayer public, and the federal government.

And there is a true need for the IRS to properly recognize and promote the Enrolled Agent designation, whether in its current state or as part of a voluntary two-tiered certification program.

And there is a true need for both enrolled and unenrolled preparers, and the IRS, need to combat the totally untrue “urban tax myth” that a CPA is automatically a 1040 expert.

And, one more, albeit unrelated, before I go.  There is a true need for an independent lobbying organization to represent the interests of all PTIN-holders (see “Who Speaks for the Tax Preparer?”).


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