Friday, July 17, 2009


A few items of interest -
* I have recently been notified that “The Wandering Tax Pro” is on the list of “Top 25 Tax Blogs by Blogrank”.

Invesp Consulting This list tracks close to 20,000 blogs and evaluates them by category based on 16 different factors. It just took IC over 8 months to develop this process.

Blogs of a category are ranked in “the ultimate rank” and separately by Feedburner RSS membership, by unique monthly visitors, by Yahoo indexed pages, by Google indexed pages, by number of incoming links, by the ratio of incoming links to numbers of pages, by pages per visit, by Google PR, by Technorati rank, by Alexa rank, by Compete rank, and by Social sites.

TWTP is currently #9 on the overall list – and in the top 10 on several of the other more specific lists. The numbers are updated daily, so the rankings could move up or down each day.

* If you have recently gotten married or plan to get married in the near future, the IRS has some tips to help you avoid stress at tax time. Summertime Tax Tip 2009-04 provides “Tax Tips for Recently Married Taxpayers”.

You should pay special attention to Tax Tip #1 -

Notify the Social Security Administration Report any name change to the Social Security Administration, so your name and SSN will match when you file your next tax return. Informing the SSA of a name change is quite simple. File a Form SS-5, Application for a Social Security card at your local SSA office. The form is available on SSA’s Web site at, by calling 800-772-1213 or at local offices.”

I have been telling clients and readers alike to do this as soon as you return from the honeymoon for years now.

* The Internal Revenue Service has announced that it will conduct a series of public forums at which individuals and representatives of “diverse constituent groups” will be able to provide input on the topic of regulating tax preparers.

The public forums, a crucial part of an effort launched in June by IRS Commissioner Doug Shulman to help ensure tax preparers are qualified, ethical and provide a high level of service, will kick off on July 30 in Washington, D.C.

Two panels are scheduled for a forum on July 30. The first panel will give consumer groups an opportunity to provide recommendations. These groups include the AARP, Consumer Federation of America, Center on Budget and Policy Priorities, National Community Tax Coalition and Low Income Tax Clinics.

The second panel will be made up of tax professional groups, including the American Institute of Certified Public Accountants, the National Association of Enrolled Agents, the National Association of Tax Professionals and the National Society of Accountants.

The panels will take place at the Ronald Reagan Building amphitheater starting at 9 AM. If you would like to attend and add your 2+ cents worth to the discussion you confirm your attendance by sending an e-mail message to:

The dates and locations of additional meetings will be announced by the IRS (and here) as they become available. Small groups of tax preparers will also have the opportunity this summer to meet with IRS representatives to present their ideas at the IRS Nationwide Tax Forums.
If you are planning to speak up for registration and licensure of all tax preparers be sure to mention the need for "grandfathering".


cmccabe said...

As a veteran tax preparation industry executive with 42 years of experience managing hundreds of tax offices and founder of The Income Tax School and the National Alliance of Tax Business Owners, I wish to provide input on Tax Preparer Performance Standards on behalf of independent tax business owners.

Unenrolled tax preparers should definitely be regulated and licensed by the IRS in order to prevent unqualified tax preparers from practicing. As discovered by the GAO, tax preparers in Oregon, where stringent regulation of preparers exists, prepare more accurate tax returns resulting in greater compliance and revenue to the US Treasury. Correctly prepared tax returns result in all taxpayers paying their fair share of tax; no more and no less.

The regulation should require licensing of tax preparers and either testing or education to ensure that they have demonstrated basic competency in preparing tax returns for which they are licensed to prepare, i.e., individual and/or non-individual: small business sole proprietor, corporation, LLC, partnership, fiduciary and estate. I think there should be at least two levels of tax preparer licensing: individual and non-individual (or both). All tax preparers, including U.S. Military Base Preparers should meet this standard.

Enrolled Tax Preparers other than EAs, i.e., CPAs and attorneys, should also be required to meet annual continuing education requirements in tax preparation (individual, corporate, partnership and estate).

To minimize the cost to taxpayers of regulation, the IRS should leverage the private sector to provide the necessary training for tax preparers to become qualified. Basic competency could be demonstrated either by passing an exam or by completing a required course as is the model used by the only two states that currently regulate preparers, California and Oregon. I believe that the completion of a required course (including a final exam) is the preferred option because some people are better than others in taking tests, but may not necessarily be more knowledgeable or competent than poor test-takers. It is also critical that students learn by preparing tax returns manually without using tax preparation software to prepare practice tax returns. If students use software, they will not learn what the software does automatically.

I understand that the state tax departments may be asked to implement tax preparer licensing. In this case, I presume the states would add their state tax law requirements to the federal requirements to ensure that competency in state tax preparation to also be demonstrated. I believe this approach, which is currently used in California and Oregon, would make good sense.

Robert D Flach said...


Thanks for sharing your thoughts on this subject.

I agree with you for the most part, especially when you state that "Enrolled Tax Preparers other than EAs, i.e., CPAs and attorneys, should also be required to meet annual continuing education requirements in tax preparation". As we both know, the mere presence of initials CPA after one's name does not guarantee that the person is competent or current with regard to 1040 preparation.

I also think there could be 2 separate licensures - 1040 preparation and "entity" preparation (1065, 1120, 990).

However because of the potentially 1 Million "unenrolled preparers" that would need to be licensed there MUST be some kind of "grandfathering" when it comes to an initial proficiency test, or specific class. It would be literally impossible for the IRS to test 1 Million applicants.


Robert D Flach said...



You also made an excellent point when you said -

"It is also critical that students learn by preparing tax returns manually without using tax preparation software to prepare practice tax returns."

We need true tax professionals who actually know the tax law, and not just data-entry clerks.

BTW- in 37 years of preparing 1040s I have never used tax preparation softward to generate a tax return - I do all my 1040s, about 400 per year, manually!


cmccabe said...


Grandfathering could be a problem because there are many unqualified preparers who need to either become competent or stop practicing. I think there could be exceptions made for preparers who have documented competence through recent completion of tax courses that provide the necessary tax knowledge to be competent, or credentials attained shch as the ATP or ATC from ACAT. I believe the IRS is going to delegate the task of preparer licensing to the states and the states that have an income tax may add their requirementd for state tax knowledge. There could also be a phase-in of some type over 2-3 years. I believe licensing of tax preparers is finally going to happen because the IRS is now in support for the first time. All other key groups are also on-board, except for CPAs who may view IRS licensed preparers as a potential threat to sustaining their market share.

cmccabe said...

I prepared many tax returns by hand during the first 19 years of my career, but I adopted computerized tax preparation and e-filing in 1987 when I founded Peoples Income Tax. Inc.

Tom said...

Why do I get a gut feeling that somewhere, someplace, sometime the government is going to screw all this up and another level of bureaucracy is going to appear magically overnite and we'll be worse off then before...

Robert D Flach said...


"Passing the buck", and the agita and expense, to the states would be a good move by IRS - but it would require all states to agree and to have a fairly uniform federal test.

Personally I would rather have the IRS do the testing and licensing and possibly have any test include a section on state tax law.

My recommendation for "grandfathering" presented to Douglas Shulman was that all tax professionals who have been preparing tax returns for a fee consistently for at least 5 years and who can document 50 or 60 hours in CPE credits for the two year period prior to the passage of licensure would be exempt from an initial proficiency test, but would be required to maintain the statutory minimum number of CPE hours for all future years.

I expect that there would be a requirement of a nominal minimum number of returns prepared for pay - 20 or 25 maybe. And that grandfathering would also require no preparer penalties within the 5 year period (except for a minor infraction like failing to sign a return or two in haste).

I do like the idea of being able to substitute successful completion of a tax course for having to take the test, but still feel that grandfathering is necessary.

You and I have been doing this for decades. I have never had any penalties or "incident" in my 37 years. I certainly do not want to have to take a test this late in my career to prove that I know what I am doing - and have been doing properly for 37 years.

A very big thank you for your comment recognizing "except for CPAs who may view IRS licensed preparers as a potential threat to sustaining their market share". The AICPA want to continue to encourage the misconception among the general public that CPAs are tax experts.

As for manual preparation - I never saw the advantage of shelling out thousands up front and hundreds annually for updates for tax preparation software. I do not see where software would save me any time, I would still have to thoroughly check each return (something many software users do not do - or do not do thoroughly enough). And from what I have heard over the years there would be more potential for errors with software than if I did it manually.

BTW - do you still have a blog for tax preparers? And what is the National Alliance of Tax Business Owners?

Thanks for participating in this discussion. Your comments on my posts are always welcome.


Robert D Flach said...

Tom K -

There is always the possibility that the IRS, or more likely Congress, will screw it up - but they seem to have done a good job with the Enrolled Agent program.

If done correctly I personaly think things will be better and not worse - correctly being the operative word.


cmccabe said...

Yes, tax preparer regulation, even with the inevitable bureucratic frustrations, would be better than the current situation, not worse.

The EA exam program was greatly improved when IRS outsourced the exam a few years ago to Procordia (a professional testing company).

I have been told by a reliable source that all of the states are already on board to administer the licensing of tax preparers.

I believe computerized tax return preparation is better as long as the preparer first learns how to prepare returns manually, as they do in our courses in The Income Tax School. Also, e-filed returns are more accurate than paper returns. I served for 3 years in the early '90s on the IRS Electronic Tax Administration Adminiastration Advisory Committee (ETAAC) which reports annually to Congress. I am committed to using state-of-the-art technology whenever feasible.

I founded the National Alliance of Tax Business Owners (NATBO) as a non-profit 501(c)(6) several years ago, but could not attain the critical mass of members necessary for IRS to recognize NATBO as a stakeholder partner, and it was costing me too much to sustain. Consequently, I have put NATBO, as an legal entity, on hold and created a LinkedIn group called Tax Business Owners of America, with a NATBO subgroup.

Tom said...

@RF - True the EA program does seem to be running good, so there's hope.

Also as for testing of tax preparers, if and when it comes. I'm sure they would probaly go the same way as they do for testing EA's through a third party service like Prometric.

Robert D Flach said...


I expect that e-filed returns are more accurate than paper-filed returns not because of any software benefits but because the tax preparer is directly transmitting the information to the IRS and the information is not being entered into the system by an IRS date-entry clerk.

One step is eliminated, and therefore potential for data input error is eliminated.

As Russ Fox of the blog TAXABLE TALK has said -

"That's also one of the reasons I like electronic filing; I trust my ability more than a clerk-typist's. I think that there's a slight advantage for electronic filing versus paper filing for audits, but that's mainly because of the possibility of transcription errors by the clerk-typist."

I do think there is more "potential" for error in a software generated return than in a return prepared manually by a competent tax professional.

Anyway, I am glad you teach tax preparation "the old fashioned way".