Wednesday, January 15, 2014


The conversation that began in “A Voluntary RTRP Designation?” and led to “A Voluntary RTRP Designation!” continues. 

In response to my response Jason Dinesen asked me the following question in a “tweet".

If a 3rd party oversaw the RTRP, what would the strategy be to make the RTRP more useful than the existing ATA/ATP designations?

Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG and the editors of TAXPRO TODAY “re-tweeted” Jason, indicating that they were also interested in my answer.

Here is my answer -

All past attempts at a non-EA tax preparer designation have been created and administered by individual membership organizations, like the NSA created the ATA and ATP designations.  The National Society of Tax Professionals had tried to initiate a credential many, many years ago, and I have come across various other attempts over the years.

To be effective the organization that administers the independent voluntary RTRP credential must have the backing, support, and recognition of the entire industry, and not just one component or organization.  NATP, NSTP, NSA, perhaps NAEA, and any other legitimate membership organization must be directly involved in the ongoing administration.  And the IRS must recognize and acknowledge the legitimacy of the credential.

As I had said in an earlier post, the current ACAT, which administers the ATA/ATP credentials, could become the independent organization to run the voluntary credential -

The ACAT could be this organization by severing its direct ties to NSA to become a truly independent organization and expanding its affiliations to include, along with NSA, the National Association of Tax Professionals, the National Society of Tax Professionals, and any other existing legitimate non-profit tax preparer membership organizations, with representatives of these organizations given seats on its Board of Directors.”

Jason adjusted his original post to include the following –

In response to his question to me at the end of his post:

(D)oes this post change your opinion in any way? And what about my idea for a 2-tiered program?

I am opposed to the 2-tiered program. Any government-sponsored RTRP program — even a voluntary one — would harm EAs.

But I have no opposition to a third party taking over a voluntary RTRP designation. In his post, Robert addresses what would need to be done to make sure a voluntary RTRP overseen by a third party would actually have name recognition (as opposed to the ATA and ATP designations that already exist and that no one has heard of). I agree with him on how to achieve recognition.

But I think it would be a tough sell. How much demand is there, really, for the RTRP designation? Very few unenrolled preparers bothered to become RTRPs when it was required by the IRS. How many would become RTRPs if it was voluntary and overseen by a third party? Probably about as many as those who become ATAs and ATPs.”

I do not see how my 2-tier IRS program – combining RTRP and EA – would hurt the Enrolled Agent credential.  There is no change to the EA credential, except for a better name.  RTRPs would NOT be allowed to represent taxpayers before the IRS without a POA.

I think that the reason unenrolled preparers who had not become RTRPs prior to the court decision was because it was required.  I personally did not sit for the test because I was waiting until the last minute to see if the IRS gave in on grandfathering for experienced tax pros.  Other “unenrolleds” might have been waiting to see how the court would decide Loving, or just been waiting until after the tax filing season to sit for the exam.

Also, when every preparer was required to become an RTRP there was no real value to the credential.  It did not set the holder apart or distinguish him/her from any other preparer.  Everyone had to be a RTRP, so it meant nothing.  It was basically a license.

If there is a voluntary RTRP designation, with a more extensive initial exam (of course with a grandfathering exemption for the veteran preparers) than the original basic RTRP competency exam, then achieving the credential will have real value, and mean something to the taxpayer public.

Of course any credential must be accompanied by aggressive and effective advertising and promotion so that the taxpayer public truly understands the value of the credential. 

“Abraham Lincoln” posted the following comment to my post –

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.”

My response to Abe –

“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.”

On the topic of a voluntary RTRP, in the Taxpayer Advocate’s recently issued “2013 Annual Report to Congress” Nina Olsen says this about a voluntary RTRP designation -

In the event that the courts decide that the IRS does not have authority to impose testing and continuing education requirements on preparers, the National Taxpayer Advocate urges the IRS to implement the following six-part strategy to protect taxpayers from preparer incompetence and misconduct:

1. Offer unenrolled preparers the opportunity to earn a voluntary examination and continuing education certificate.

2. Restrict the ability of unenrolled preparers to represent taxpayers in audits of returns they prepared unless they earn the voluntary examination and continuing education certificate.

3. Restrict the ability to name an unenrolled preparer as a Third Party Designee on Form 1040, U.S. Individual Income Tax Return.

4. Mount a consumer protection campaign to educate taxpayers about the need to select competent preparers who can demonstrate competency.
5. Develop a research-driven, Service-wide preparer compliance strategy similar in nature to the Earned Income Tax Credit (EITC) preparer compliance strategy.

6. Recommend that Congress revise 31 U.S.C. § 330(a)(2) to clarify that the IRS has the authority to regulate unenrolled preparers.”

I certainly support parts 1 and 4.  I have no idea what exactly she means by part 5, and I strongly oppose parts 2, 3, and especially 6.

Fellow tax blogger Russ Fox puts his more than 2 cents in the discussion with his post "The IRS Has Better Things To Do than the RTRP Designation" at TAXABLE TALK.

Let’s not end the conversation here.  I welcome and solicit comments and tweets from fellow tax pros and the taxpayer public.  And look forward to hearing more from Jason, Joe, etc.


1 comment:

Anthony DiPierro, EA said...

"There is no change to the EA credential, except for a better name."

Is this referring to the name "Enrolled Tax Return Preparer"? If so, this is a worse name. Status as an enrolled agent has nothing to do with tax return preparation. It has to do with the ability to act as an agent - to represent taxpayers in front of the IRS.

As I said on Jason's blog, the only way I'd possibly support this is if the RTRP test (or whatever you want to call it) is just as hard as the SEE (the EA exam), and no one is grandfathered in except possibly those who have passed the SEE.

If you give people who are less expert in taxes than EAs a special designation, that absolutely *will* hurt the EA credential. There's nothing magical about the term "Enrolled Tax Return Preparer" which tells the public that it's a higher status than "Registered Tax Return Preparer". The latter would quite plainly dilute the value of the former. And if the test isn't mandatory, what's the point of making it easier than the SEE?

"of course with a grandfathering exemption for the veteran preparers"

What would be the point of grandfathering in veteran preparers? A veteran preparer can already simply advertise her veteran preparer status.