non cpa's non ea's

[michaelmars]

does anyone know just what a registered tax preparerer vs. cpa, vs ea can do from the irs point of view. Can a preperer, get poa from a client, handle an audit, etc? I already know that only cpa's can go to tax court. but need to know the other limitations.

[Lynn EA USTCP in Louisiana]

Actually CPA's may NOT go to Tax Court if they have not passed the Tax Court Exam. An RTRP have limited representation rights and may represent clients only for tax returns they have prepared, and only with exams and not collections or appeals. EA's, CPA's and Tax Attorneys have unlimited representation rights. Below is a chart from the IRS website with a comparison.

Overview of Tax Return Preparer Requirements

The chart below provides an overview of the various categories of individuals who may prepare federal tax returns for compensation.

Category

PTIN

Tax Compliance Check

Background Check

IRS Test

Continuing Education

Practice Rights

Enrolled Agents*

Yes

Yes

Proposals Pending

Yes (

Special Enrollment Exam)

72 hours every 3 years

Unlimited

Registered Tax Return Preparers**

Yes

Yes

Proposals Pending

Yes (

RTRP Test)

15 hours per Year

Limited

CPAs***

Yes

Yes

Proposals Pending

No

Varies

Unlimited

Attorneys***

Yes

Yes

Proposals Pending

No

Varies

Unlimited

Supervised Preparers†

Yes

Yes

Proposals Pending

No

No

Limited

Non-1040 Preparers‡

Yes

Yes

Proposals Pending

No

No

Limited

*Enrolled Agents have passed a three-part, comprehensive IRS exam covering individual and business returns. They must adhere to ethical standards and complete 72 hours of continuing education courses every three years. EAs have unlimited practice rights before the IRS, which means they can represent clients for any tax matter.

**RTRPs have passed an IRS test establishing minimal competency. The test covers only individual income tax returns (Form 1040). They must adhere to ethical standards. They must also complete 15 hours of continuing education each year. RTRPs have limited practice rights before the IRS, which means they can represent clients in only certain circumstances.

***CPAs and Attorneys have unlimited practice rights before the IRS.

†To determine if you are a supervised preparer, view the fact sheet

‡ If you only prepare Forms 1040-PR and 1040-SS, you are considered a non-1040 preparer

Lynn Jacobs, EA, FNTPI

Enrolled Agent

Civil Law Notary Public

Kenner, LA

[Lynn EA USTCP in Louisiana]

Well, when the reply posted the chart lost all its formatting. Here's a link to the page on the IRS website with that info:

http://www.irs.gov/Tax-Professionals/Overview-of-Tax-Return-Preparer-Requirements

Lynn

[BulldogTom]

EA's and CPA's cannot represent their clients before the tax court. Only Lawyers or those passing the tax court bar can do so.

EA's & CPA's are allowed to represent their clients all the way through the appeals process. RTRP are only allowed to represent their clients through the examination stage of an audit. They cannot represent their clients on appeal.

This brings up a question I have (but one I don't have to worry about because I am an EA). During the examination phase of the audit, I am allowed to call for a conference with the auditors supervisor prior to the conclusion of the audit. Does a RTRP have that same ability, or does it go beyond the scope of the examination phase of the audit?

This sounds like a question for Jainen - the expert in all things relating to representation.

Tom

Hollister, CA

[Lion EA]

RTRP can represent a client for a return he prepared only, I think.

[michaelmars]

as a cpa i was allowed to rep a client before NYC tax court, i guess i just assumed i could in federal court too [not that i ever would]. first time i ever heard of something being easier in ny taxes than federal.

Thanks for all the info.

[Pacun]

Lion, you are right.

RTRP is just like an unenrolled preparer used to be... he can only represent its own returns at certain levels before the IRS.

[jainen]

>>EA's and CPA's cannot represent their clients before the tax court<<

An EA or CPA can be admitted to practice before the Tax Court under Rule 200 http://www.ustaxcourt.gov/rules/Title_XX.pdf. You must be sponsored by two attorneys . The examination is every two years; it's too late to apply for the next one on November 14. http://www.ustaxcourt.gov/press/050812.pdf

[kcjenkins]

and, of course, the pass rate is ridiculous. only 202 non-attorneys have been admitted to practice since the exam began in 1943.

[mcb39]

Lion, you are right.

RTRP is just like an unenrolled preparer used to be... he can only represent its own returns at certain levels before the IRS.

This makes the RTRP sound so mundane. Those of us who took the test were in a panic for days prior and greatly relieved when it was over. In our own way, we have advanced at the level required (not necessarily desired). I don't consider myself to be any better or worse a preparer than I was before the test. I will still do the best job that I possibly can for my clients. I took the test for them rather than for myself. As for CE, I have always done that on my own. Knowing where and how to find the answer is a huge part of this job.

I have never messed up badly enough to have a client require representation. At my age, I am not in this to take care of anyone's clients but my own. I am not offended by any of the above posts, but recognize that some younger preparers might be. We were forced to take this test in order to protect a great deal of time and equipment invested in what we do.; and I don't necessarily think that it has solved any problems for the IRS who is standing over us with a club. :read:

[JohnH]

The RTRP is mundane, but it's only the opening volley in a process which will eventually result in all tax preparers functioning as unpaid surrogate auditors for the IRS. I used to think this might be a 10-year process, but given the way they are reaching, I think it will be pretty much in place within 3-5 years.

[mcb39]

That probably means that I am in the process of wasting nearly two years' profits on a remodel/addition to my office and hardware because my job might become redundant. I have the same suspicions, John, but sometimes we just need to move forward. In any event, I am helping to stimulate the economy.

[joanmcq]

Passing the RTRP may not have changed anything in the way YOU work, but if you look at the number of preparers that have taken the exam. you do now have a credential that many don't have, and apparently don't want. YOU may have always taken CPE, but many, many 'preparers' out there didn't. This is about being able to track and put out of business the crappy preparers out there, which is good for our business, and good for our profession. Remember, CPAs and EAs have always been subject to Circular 230 and it's due diligence requirements. This stuff might be new for you, but it's not for us.

[Jack from Ohio]

I agree with the principle, but... How is giving a test where they give you access to enough answers to pass going to "...put out of business the crappy prepareres out there..."

I am seeing many very competent, experienced, ethical preparers leaving because of the requirements.

Not getting how this system is helping....

[kcjenkins]

Passing the RTRP may not have changed anything in the way YOU work, but if you look at the number of preparers that have taken the exam. you do now have a credential that many don't have, and apparently don't want.

I expect that a lot of the people choosing not to bother to get the RTRP are older ones who have just decided not to bother, preferring to retire rather than jump through any more hoops. I really doubt that the bad ones will be significantly reduced. We will have to wait several years, though, to get any real idea of it's effectiveness..

[OldJack]

I expect that a lot of the people choosing not to bother to get the RTRP are older ones who have just decided not to bother, preferring to retire rather than jump through any more hoops. I really doubt that the bad ones will be significantly reduced. We will have to wait several years, though, to get any real idea of it's effectiveness..

Yep... I have decided to retire rather than work for the government.

[mcb39]

I agree with the principle, but... How is giving a test where they give you access to enough answers to pass going to &quot;...put out of business the crappy prepareres out there...&quot;

I am seeing many very competent, experienced, ethical preparers leaving because of the requirements.

Not getting how this system is helping....

We can argue this subject into the ground and resolve nothing. I am one of the older preparers and have chosen to move forward. I just don't agree that compliance will solve much as we are losing some excellent preparers because of it. I have the credentials now and am happy to be certified. However, just as it will not change the way that I do business, this could also be true of many of the "slackers ". On the other hand, the test wasn't as easy as many seem to think.

I was quite bitter early on, but have put that behind in order to move on and continue to offer services to my clients. As I said before, I took the test for them. I take the CE for me.

[Jack from Ohio]

I am taking the E.A. tests. The RTRP was grade school compared...

[elfling]

In the realm of crappy preparers is the joe schmoe across town who "does returns on the side" and accepts payment of whatever folks "negotiate" with him. He doesn't fill in the preparer section or sign the return even though he received cash for it. Why people trust him I'll never figure out. Sure, they may have saved a few dollars. But they have also dealt with someone unlikely to help if any government branch questions anything. Yes, it is true the taxpayer is ultimately responsible for the return and said taxpayer chose that preparation route. So who is ultimately at fault? (rhetoric)

Several times our office has been contacted to assist in audits or reviews of returns prepped by the schmoe. Sometimes we help, other times we decline. Depends on the extent of the mess. Thankfully, auditors so far have allowed us to help the ones we took on. Usually those people then become clients trusting in our knowledge.

There are people out there who may view the fact that we pass the RTRP exam as reinforcement that we do know what we are doing. Still, it won't elimiate schmoe.

Elfling

[BulldogTom]

I think the IRS is shooting at the wrong target. Here is what I think they should have done.

To buy into this idea, you have to accept the premise that nearly every tax return is going to be prepared on some type of software.

If that is the case, then you register the software. IRS should make the software providers require registration of the software before it activates. The buyer of the software MUST register their software using their Social Security number. The software provider then imbeds the SS# into the return with no way to take it out. When the return is scanned or e-filed, that social security number is part of the return.

IRS would then have a database of the software company and the person who bought it. When more than one return is filed from the software and there is no paid preparer information, they could investigate.

This would stop the Turbo Tax mills from operating.

Just my humble opinion. But I think it would be easier for the IRS to regulate the software than the preparers. It would be a smaller group, and if they objected, the IRS could just pull their ability to e-file.

Tom

Hollister, CA

[OldJack]

>>I think the IRS is shooting at the wrong target.<<

I agree! The target should be to repeal individual federal income tax. Why should ever one in the country go thru this mental masturbation every year.

[Edward]

But how do you catch the preparers that are doing returns when they go to all the free filing available on the internet. I know of one lady that I found out thru one of her clients from 2009 that I picked up and the preparers block says "Self-Prepared". The client says she went into the internet, does the return but leaves no clue as to who she is and when finished, runs a copy for the client and boom, there is no record of the preparers name since she is using the clients name, etc. She also charged a pretty good fee for the return; and I'm certain she is not reporting any of the income made like this. She works out of her home in the evenings and week ends. IRS has no way whatsoever of finding these types since they don't leave no trail.

[SaraEA]

Tom, your idea of embedding SS numbers into software for efile is creative but has a few holes. One is that the preparers might just bypass efile and produce paper returns. Another is that SS numbers seem to be a dime a dozen and only have to be bought or stolen. Then some poor victim of identity theft will get in trouble for filing zillions of fraudulent returns on top of their other woes.

At a seminar last year a gal from the IRS discussed how the agency is working to identify "ghost preparers." She would not say what they were doing, but they were aware of the problem and apparently doing something about it. I don't think much can happen on this front until the day when everyone has to take the test and the IRS can start advertising to the public the importance of using only those with PTINs (no longer provisional). They say they won't do that until everyone comes under testing requirements, a date they keep delaying. So now many tax pros have to pay for PTINs and tests but do not get the national publicity that was promised. To me, that is where the good idea of registration went bad.

I too have seen lots of returns marked "self-prepared" that were done by someone for pay, usually done wrong. I also keep seeing clients come in whose long-time preparer retired and last year's return was done by hand. Some of these had years of depreciation schedules, on green accounting paper, and accurate! Others were still using 18 year depreciation (retired with ACRS), salvage value (before my time), the old HOH rules where a widow could use that status if her 40 year old son who made $60k a year lived with her, and they obviously hadn't taken an update course in 10 years. The price of the return was often $100. No wonder the old guy retired, who could meet expenses with that?

[BulldogTom]

But how do you catch the preparers that are doing returns when they go to all the free filing available on the internet. I know of one lady that I found out thru one of her clients from 2009 that I picked up and the preparers block says "Self-Prepared". The client says she went into the internet, does the return but leaves no clue as to who she is and when finished, runs a copy for the client and boom, there is no record of the preparers name since she is using the clients name, etc. She also charged a pretty good fee for the return; and I'm certain she is not reporting any of the income made like this. She works out of her home in the evenings and week ends. IRS has no way whatsoever of finding these types since they don't leave no trail.

<<But how do you catch the preparers that are doing returns when they go to all the free filing available on the internet>>

By making the site register the user. Happens all the time with sites. You have to give them a valid e-mail address and type in the funny letters. They send you an e-mail back that allows you to finish your registration. It won't stop everybody, but it will make it difficult to continue to use that service if you get a one time registration shot at it.

Tom

Hollister, CA

[OldJack]

But, there is nothing wrong with preparing someones return as long as you are not paid. So the IRS is not going to be able to assume that every preparer is violating any law. And the IRS doesn't have the man power to check much. Its an IRS scare and not going to change those that want to cheat.