The IRS has issued complete rules for its new voluntary Annual Filing Season Program and one must wonder “Why?” What is the IRS hoping to accomplish through this initiative and what use is this program?
It is well-known that the program is a reaction to the IRS loss in the Loving case, which struck down the mandatory preparer registration program. Many preparers jumped on the bandwagon and sought the designation “RTRP,” which was the certification provided by that program. With the demise of the program, the designation is also dead in the water. The IRS has stated that it does not recognize the RTRP designation, but will not comment on whether a professional can use the designation. They have stated that there is nothing to stop RTRP’s from displaying their certificates.
The Annual Filing Season Program requires 18 hours of continuing education annually, including six hours of federal tax law updates, 10 hours of federal tax law topics, and two hours of ethics. The six hour requirement is referred to as the “refresher course.” Upon completion of this requirement the preparer will receive a Record of Completion which applies to tax returns completed in the next calendar year. So, completion of the continuing education requirement in 2014 will satisfy the requirements to prepare returns in 2015.
Candidates must score 70 percent or greater on the refresher course. CPA’s, enrolled agents, and attorneys are exempt from the refresher course. Also exempt are those passing the RTRP examination and preparers who are licensed or registered by any state requiring exam on federal tax matters. Exams passed by other entities recognized by the IRS will also qualify, these will be listed on the IRS website. Those exempt from the refresher course still must complete 15 hours of continuing education.
Those holding a Record of Completion under the Annual Filing Season Program may represent clients during an examination if they signed and prepared the return. They may not represent the client before the IRS appeals officers, revenue officers, IRS counsel, or similar IRS employees.
Those holding a Record of Completion may not use the terms “certified,” “enrolled,” or “licensed” to describe their status. They may represent that they hold a valid Annual Filing Season Program Record of Completion.
This program suffers from several deficiencies, the first of which is a lack of identity. The program has a name, but what do certificate holders call themselves? I hold an “Annual Filing Season Program Record of Completion” is a mouthful and will probably leave clients with a “Huh?” Then the Certificate Holder must explain the designation. There is a lack of identity.
This leads to the second deficiency. This lack of identity will inevitably have the result that this is a lower class of return preparers, being looked upon by the public as lesser than a CPA, EA, or attorney.
The third deficiency, in my opinion, is a lack of response. I can envision that there will not be a rush to obtain this designation. Part of this reason is the lack of identity. The preparer will question if there is any benefit from achieving the designation. Obviously, many are not CPA’s or attorneys and will never be due to the legal requirements to obtain that status. However, any preparer can qualify to be an Enrolled Agent. Why would one “settle” for the Annual Filing Season Program when they can put forth some additional effort and become an EA?
Finally, one must ask what benefit there is to the IRS or the general public in having this designation. It does not seem to me to be a program that will deter unethical preparers. If I am going to operate in an unethical manner, I am not going to join the program and its existence will not deter my actions. How will this designation encourage the public to avoid unethical preparers? The IRS already collects $64.25 from all preparers when annually renewing their PTIN. A portion of that is supposedly utilized for educating the public about unethical preparers. This program does not give us anything new to deal with this problem.
The only solution I see for an Act of Congress to enable the IRS to require something similar to the RTRP program. Given the current political climate, this seems unlikely. But is even this a viable solution? Will it solve any problems perceived or real? I think not, but stay tuned.