Congressional Committee Checks In on Registered Tax Preparer Program

While tax professional communities offered diverging opinions of the registered tax return preparer (RTRP) program to a congressional subcommittee, all agreed on one thing—the IRS made a significant effort to listen.

Although the program when initially proposed got off to a “rocky start,” a representative of the National Association of Tax Professionals (NATP) told the House Ways and Means Oversight Subcommittee, the NATP was pleased with the way the IRS solicited feedback.

“The IRS has devoted an unprecedented amount of time to listening to stakeholder concerns and suggestions ... and made numerous changes and adjustments,” said Patricia Thompson, chair of the AICPA’s Tax Executive Committee. In her testimony, Thompson reiterated the AICPA’s support for the program as it is currently structured, particularly components such as the application of ethics rules (Circular 230) to all paid income tax preparers and gearing continuing education requirements toward unenrolled preparers.

Other witnesses raised concerns about the program, including the impact on some of the preparers who have to take the competency exam and potential confusion among consumers about the various types of preparers. Thompson’s testimony touched heavily on the consumer confusion issue.

Paul Cinquemani, director of Member Services, Business Development, and Government Relations for the NATP, observed that many of that organization’s members are having test anxiety. “The average age of our members is 56. It’s been quite a while since they’ve had to take an exam.” Some preparers, he said, will simply retire or sell their business by the end of 2013, when all paid preparers (other than CPAs, attorneys and enrolled agents) will have to have taken the exam. Approximately half of the NATP’s members would have to take the exam, he said.

Kathy Pickering, H&R Block’s vice president of Government Relations, echoed Cinquemani’s comments about the potential for fewer preparers, especially in rural areas, as the testing requirement takes effect. She also commented that the company may have trouble educating all of its 97,000 temporary employees out of tax season to ensure they are aware of the requirements.

Enrolled Agent Lonnie Gary, who chairs the Government Relations Committee for the National Association of Enrolled Agents (NAEA), voiced concern that taxpayers are not being educated about the program early enough to ensure their preparer is compliant. The NAEA also objects to the fact that the exam only covers “the basic elements” of Form 1040, yet RTRPs will be able to prepare other types of returns beyond the 1040. “It only protects a portion of taxpayers,” he said, leaving out those with more complex returns. Research and documentation will be key to making the program successful, said James White, director of Strategic Issues for the Government Accountability Office (GAO), the investigative arm of the federal government. In its March 2011 report, the GAO found that the IRS began to implement the requirements before laying out strategies for how to leverage them and measure their effect. The IRS agreed that it needs to document a framework to show how it intends to use the program to improve compliance.

David Williams, the IRS’ director of the RTRP program, said the Service will continually conduct research and test various strategies to implement the program and to weed out ghost or fly-by-night preparers—those who might not sign tax returns prepared for clients or adhere to other program requirements. Setting up a system for collecting complaints from taxpayers will also be a critical component of enforcement. However, “it’s going to cost some money,” he warned.

Tax Insider Articles


Business meal deductions after the TCJA

This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.


Quirks spurred by COVID-19 tax relief

This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID-19.