Thursday, July 17, 2014
CONTINUING THE DISCUSSION ON THE NEED FOR A VOLUNTARY TAX PREPARER CREDENTIAL
In response to my call for a voluntary RTRP-like credential, and the IRS’s new voluntary Annual Filing Season Certification program, many tax professionals state that the IRS already has a voluntary credential – that of Enrolled Agent or EA.
I agree that this is a true statement of fact. A preparer who passes the Special Enrollment Exam and maintains the required 72-hours in CPE over a three-year period has certainly demonstrated competence and currency in the preparation of 1040s.
Historically, however, the purpose of the Enrolled Agent credential, and the reason many preparers become an Enrolled Agent, has more to do with representation and “practice” than with “preparation”. An Enrolled Agent is authorized to “practice” – i.e. represent any taxpayer – before all levels of the Internal Revenue Service audit process.
Many tax preparers, myself included, do not want to “practice” before the IRS. All I want to be able to do is discuss with or explain to the Internal Revenue Service the 1040s that I have personally prepared, not as a “legal representative” of the taxpayer but merely as the preparer of the return.
Representation of taxpayers before the IRS can be, and has become for many EAs, a full-time job separate from the actual preparation of tax returns.
The Special Enrollment Examination is a difficult and comprehensive test, comparable in difficulty to the CPA exam (FYI, passing the CPA exam is by no means whatsoever any proof of competence in preparing 1040s). It consists of three parts – Individual Taxation, Business Taxation, and Representation, Practice and Procedures. The fee for taking the SEE is $109.00 for each of the three parts of the examination – or a total of $327. And it is advisable that an applicant take an EA Exam Review Course. NATP currently charges its members $606 for its complete review course.
As mentioned above, EAs are required to maintain 72-hours of CPE in taxation over a 3-year period. This averages out to 6 mores hours per year than the current requirement for the new IRS credential.
So becoming and remaining an Enrolled Agent is an expensive proposition. Appropriate for being able to practice before the IRS, but certainly excessive for those who do not wish to practice.
There is a need for a unique, specific, universally recognized and accepted voluntary credential, complete with initials, that will identify to the taxpayer public a tax preparer’s competence and currency in the preparation of 1040s based on the passing of an initial competency test and the maintenance of required annual CPE in taxation but does not involve "practice" before the IRS – whether it is administered by the IRS or an independent industry-based organization.