Registered Tax Return Preparers (RTRP) are coming. They aren’t here yet, but they’re in the pipeline.
RTRP are a recent creation of the IRS. There levels of authorized preparers already exist: attorneys, CPAs and Enrolled Agents(EA). These three categories of preparers are referred to by the IRS as enrolled. Everyone else is presently considered to be an unerolled preparer. The enrolled preparers are authorized by the IRS to prepare tax returns and represent any taxpayer before all administrative and collection functions of the IRS. Presently, unerolled preparers are not authorized to represent taxpayers before the IRS unless they are the person who actually prepared the tax return in question (audit, etc.).
Heretofore, the IRS had absolutely no requirements concerning who was eligible to prepare tax returns. Any individual, regardless of knowledge, experience or skills, could simply declare to the world his/her intention to file tax returns. There are hundreds of thousands of paid preparers filing tax returns each year and the taxpayer public has had no way to assess the abilities of those individuals.
Attorneys and CPAs must meet education and competency test requirements before they are state authorized to practice their specialties. Enrolled Agents are required to pass an extensive three part tax exam directed by the IRS before receiving federal authorization to practice.
What’s the holdup, you may ask, to becoming a RTRP? The IRS has established very specific qualifying criteria for this new designation. Each RTRP wannabe must first pass a 1040 competency exam, and pass a criminal investigation check.. So, how many individuals have completed this process? Would you believe – none. The exam doesn’t yet exist and the latest word available indicates it will not be available until mid to late October 2011.
Therefore, if you see any tax preparers currently advertising they are RTRP, ignore this assertion. As a practical matter, it will likely be well into November or even December before a preparer can rightfully hope to proclaim this designation. Actually, no one knows at this point when the exams will be held at the 200+ locations around the country, and how long it will take to complete the criminal investigation process.
Don’t be lulled into thinking this new category of RTRP will be some uber-preparer. The IRS will no longer consider them unerolled preparers. However, the designation does not rise to the same level as attorneys, CPAs and Enrolled Agents.