Thursday, January 9, 2014


Fellow tax blogger and (not fellow) Enrolled Agent Jason Dinesen has replied to my earlier request for his opinion on the issue of a voluntary RTRP designation, which has been made a current topic as a result of the recent comments by new IRS Commissioner John Koskinen (click here for the ACCOUNTING TODAY article), in “A Voluntary RTRP Designation?” at the DINESEN TAX TIMES.

Jason opposes the idea, whether it is administered by the IRS or a “private overseer”.

He makes the following comments within the post –

What purpose would it serve?  It would be a useless designation no matter who oversees it.

If administered by the IRS, it would harm Enrolled Agents.

If you can prepare tax returns without being an RTRP, and if the RTRP designation doesn’t allow a person to represent clients, what exactly would people who achieve a voluntary RTRP designation do with it?????  What’s the point?????

Under the current system any Tom, Dick, or Harriet can hang out a shingle as a “tax preparer”.  It has been this way for 100 years.  There are many educated, competent, and current “unenrolled” Toms, Dicks, and Harriets.  I am one of them.  I never wanted to represent non-client taxpayers before the IRS, so I never became an Enrolled Agent.  I can represent my own 1040 clients at an IRS audit as preparer without an EA credential.

But what about the person who simply buys a tax preparation software program and holds himself/herself out to the public as a “tax preparer” with no training or experience in tax preparation?  Or the guy or gal who has been preparing his/her own return and those of family and friends for years and now wants to make some extra part-time money at tax time by taking on “strangers”?  Or, worst of all, the person who adds tax preparation to his business solely so that he/she can sell “Refund Anticipation Loans” and profit from usurious interest rates and processing fees?

As a knowledgeable, experienced, competent, ethical, and current “unenrolled” preparer I, like Rodney Dangerfield, “get no respect”.  The point of a recognized designation is to set me, and those like me, apart from the “casual”, unethical, or uneducated preparer, and recognize my knowledge, experience, competence, and currency in preparing 1040s.

And the point is to provide the taxpayer public with a way to identify that a person claiming to be a “tax professional” is truly knowledgeable, experienced, competent, ethical, and current in 1040 preparation.

Jason is correct when discussing the already existing voluntary ATA and ATP credential, which I addressed in my December 2013 TWTP post “Here’s A Thought - A Few More Cents on a Voluntary Credential for Tax Pros”.  These credentials have little meaning because “1) no one has ever heard of them and 2) they have no legal backing”.

To be of value a non-IRS administered voluntary RTRP-like designation must be overseen by an independent organization with industry-wide support and recognition and at least “acknowledgement” by the Internal Revenue Service.  And it must be heavily promoted by the overseeing independent organization.

I also agree with Jason that, unfortunately, “no one’s heard of the EA designation either”.  The fault lies with both the IRS and the NAEA.  And with the actual designation itself.  A large percentage of the public erroneously thinks an EA is actually an “agent” or employee of the IRS.

And I do agree that the mandatory IRS RTRP credential, when it was in force, did indeed “dilute” the EA credential.  Many Enrolled Agents sat for and passed the IRS competency exam to get the RTRP designation solely for public relations purposes.  As one EA told me, it is easier to tell a potential client that one is a “Registered Tax Return Preparer”, which is self-explanatory, than to have to explain what an Enrolled Agent is.

If there is to be an IRS-administered RTRP designation I have suggested that it be part of a two-tiered program that includes the current EA designation, which I would change to ETRP (Enrolled Tax Return Preparer).

As I suggest in my ACCOUNTING TODAY editorial “What the IRS Should Do About the RTRP” –

A preparer, again including CPAs and attorneys, would first apply for and be granted the RTRP designation by way of a test that is limited to tax preparation (more involved than the original basic open-book basic test). Minimum annual CPE in federal tax topics would be required once the RTRP designation was granted. Those who had been designated an RTRP under the former regulation regime would be “grandfathered” into the new voluntary program, so the time and money they spent under the former mandatory RTRP program would not have been wasted.

After a year, an RTRP could elect to take a second test, with emphasis on taxpayer representation issues and other advanced topics, to become an ETRP (Enrolled Tax Return Preparer -- a new title for the current Enrolled Agent) and be permitted to “practice” before the IRS.”

The IRS would need to educate the public on the differences between the RTRP and the ERTP.

Regardless of who oversees the voluntary designation any competency test needs to be more extensive than the truly basic exam that was in effect under the mandatory regulation regime.  And there must be grandfathering for experienced preparers who demonstrate they maintain annual CPE in taxation.

If there is a voluntary RTRP program I personally will not take advantage of it.  I do not accept new 1040 clients, and am actually trying to “thin the herd” in anticipation of retirement, so I no longer have a need to be “recognized”.

So, Jason, does this post change your opinion in any way?  And what about my idea for a 2-tiered program?



Abraham Lincoln said...

Regulations like the proposed RTRP rarely achieve their goals. I'd rather not deal with any of the regulation - which isn't going to protect anyone from anything - and save everyone another layer of bureaucracy.

Robert D Flach said...


I agree when it comes to mandatory government regulation. But the beneficiaries of a voluntary credential are the tax preparers themselves and the taxpayer public.