Voluntary Licensing?

With the current IRS licensing on hold, Robert Flach, the Wandering Tax Pro, proposed a voluntary licensing program on his blog and asked for comments and thoughts. Here are mine.

This is all conjecture since we don’t know yet know how the IRS will respond to the defeat. But assuming the decision doesn’t get overturned and Congress doesn’t pass a proper law here is what I think about a voluntary tax preparer certification/licensing program.

The PTIN program is continuing. Loving vs. IRS didn’t change that. I also don’t think the fees will change because the IRS needs to cover the cost of the registration program and PTIN database. Renewal should be annually or at the most every two years. Over 2 years and the lists become stale.

As for the voluntary licensing, which one? It would be nice to think that one of the existing tax preparer organizations will create a definitive program but I can see testing and certification programs popping up all over the place. That could be the downfall of a voluntary program; too many options and criteria. Each program would have their own designation and qualifications. Tax preparers could chose the program they like the best (easiest test, least continuing education, lowest cost). Taxpayers would be confused trying to keep the designations separate.

If I was creating the program, I would have a mandatory test and annual continuing education of at least 15 hours for anyone preparing over 10-15 returns a year. I wouldn’t have grandfathering (sorry Robert) because I’ve seen too many “experienced” preparers make mistakes. If you’re going to have a standard, everyone should have to meet the same standard no matter how long they’ve been in business or how many returns they do a year. Keep it simple.

About the test. It wouldn’t be open book. It should go a bit beyond the minimum knowledge of the RTRP test. If you’re going to competency test someone, you should really test their knowledge especially if you are going to market that person as an expert.

I also don’t care what they call the new program as long as it won’t be confused with “Enrolled Agent”.

The key to any licensing program is education of taxpayers. They have to know how it’s to their advantage to use a certified/licensed tax preparer as opposed to one who isn’t.

So that’s my idea for voluntary certification/licensing; a proper test and continuing education with the same standards for everyone. Then spend some money marketing your graduates to the taxpayers.

McIntire Tax Center - on Facebook - on Google+ - or Twitter @ mactax.

Comments

[Robert D Flach]

TM-

Thanks for responding to my call for comments.

My response to your response will be included in a new post at THE TAX PROFESSIONAL tomorrow morning.

I do agree that the key to any tax preparer designation is the education of taxpayers. This would be a priority of the NIRTRPs.

Thanks again for your thoughtful insights.

TWTP

[Michael Gifford]

I fully agree with you on the testing. It should be for everybody. My wife has been doing taxes for about a decade (she started out working for the franchise chains, ended up working for all 3 of those and ran an office in 1 for years when her clients talked her into starting her own, we aren't big yet but we are striving for that goal) and has always made sure to follow all new and existing tax laws and changes. She welcomed the RTRP test and due to unforseen circumstances (my being laid off) she had to schedule her exam for April 2013 we have already paid for this exam that she may not be able to take now. But she is determined to continue on with becoming an EA. Just wish the IRS would respond so everybody would know where they stand. Taxes are my wifes driving force, she actually loves them, not being able to have that RTRP designation before season opens killed her so this year we strive for the designation of EA. Oh and by the way LOVE the blog!

[Bruce]

I agree with you 100%, with one question.

When you say everyone who prepares returns, you do mean "everyone", CPAs, Attorneys, ... "Everyone" who does returns for compensation, right?

[Trish]

Bruce -Remember we're talking about hypothetical voluntary testing which I would open to everyone. But since it's a voluntary program, I wouldn't expect CPAs or attorneys would consider they needed to take the test.
However, I thought they should have been included in the IRS testing.