Unless you’ve been under a rock, you should know by now that the IRS has released their new voluntary tax preparer program. The new program is designed to be in place January of 2015. The IRS is using this voluntary program until they can get the Congressional authorization for a mandatory tax preparer program. I’m not too optimistic about a mandatory program. Let’s face it there have been several bills regulating tax pros before and they all died when the Congressional session ended.
The IRS Filing Season Program is the service’s response to the Loving et al vs IRS decision invalidating the RTRP program. Under the Filing Season Program, tax preparers who complete a required number of continuing education (CPE) hours for the year may sign up to receive a certificate and be included in the IRS public database of tax professionals for the following year. They will still need to have a valid preparer identification number (PTIN) but there is no additional cost to be certified. (Except the cost of continuing education.)
The required number of CPE will depend on the preparer. Most preparers will need 18 hours for a year. 6 hours will have to be a federal tax refresher course with a 100 question quiz. Candidates will also need to take 10 hours of federal tax topics and 2 hours of ethics. Preparers who had already passed the RTRP test, the Accreditation Council for Accountancy/Taxation’s tax preparation course, a state testing program, the first part of the EA exam or are VITA reviewers and instructors only need 15 hours of CPE to qualify. They won’t be required to take the 100 question exam. The hours required to qualify for the 2015 season starting in January will be pro-rated because of the late start of the program.
The catch to the program, and there is a catch, is that by applying to the get a voluntary certification, a preparer must agree to follow the rules for preparers who are allowed to practice before the IRS as outlined in Circular 230; subpart B and section 10.51. Tax pros that are already covered under Circular 230 include Enrolled Agents, CPAs and attorneys. These tax pros will also be included in the database but not subject to the additional CPE requirements. The IRS will also be limiting the 3rd party designee status to those who are in the database. This designation is made on the tax return and allows the return’s paid preparer to deal with the IRS for the client on issues arising from that return without a power of attorney for one year. Starting with 2014 tax returns, only those in the tax preparer database will be able to be a 3rd party designee. Other paid preparers will have to have a power of attorney even if they prepared the return.
It will be interesting to see how much response the IRS gets on the program. As an Enrolled Agent, this doesn’t really affect me. As I understand it, I can be included in the database without the test (I already take 24 or more CPE a year.) If I wasn’t an E.A., would the carrot of inclusion in the database and the 3rd party designee be enough to get me to sign up? May-be if my annual CPEs usually met the IRS’s minimums numbers. But if I wasn’t doing that many hours, I might not think that the IRS’s “carrots” make it worth taking more CPEs. It’s more a benefit for the “good” preparers – preaching to the choir. If the IRS wants to convince those who aren’t taking enough continuing education they need to offer a better “carrot”.
My suggestion for a real “carrot” is to add back to e-Services the disclosure authorization (DA) and electronic account resolution (EAR) programs and limit their use to tax pros that are in preparer database. The IRS cut these programs last year. They couldn’t be used in all situations but when they could be used they were a terrific time help. I bet a lot of tax pros would consider having access to submitting online disclosure authorizations and submitting client problems through the EAR program incentives worth signing up for the voluntary program and taking more CPEs.
I’m interested in seeing the numbers of the Filing Season Program come January 2015. Honestly, I don’t think they are going to be as high as the IRS hopes.