CPAs sue over PTIN fees

http://www.accountingtoday.com/news/leg ... A&st=email

class-action law suit regarding the requirement to register and pay annually. This makes my day.

I think this lawsuit is past due. I for one would even contribute to the legal fees. While I personally think the IRS should be able to regulate preparers, I don't understand the necessity for annual renewal of the PTIN other than a method to tax us without calling it an additional tax. There are no annual fees for SS or EI numbers and that is all this really is. We already pay renewal fees for our EA, CPA or other licenses. There should be an initial filing fee to get the PTIN to cover the costs, but once you have the PTIN it should automatically renew, or at the most IRS should require it to be used in conjunction with filing a paid return every year or you will face revocation.

I was also happy to see that bit of news. I certainly hope they (we) win, it's ridiculous to have to pay to renew & go through the process of renewing. I renew my EA license & pay that fee, there's no reason for this anymore.

I would be quite happy to pay the fee if I could be reassured that it goes towards funding preparer compliance. i read today that it does not. I would be even happier if we had a proper professional body regulating preparers and advisors, so the IRS could step away from this role. Is it just me that finds it staggering that the current professional certification in the tax profession is controlled by the IRS?

The money that was collected to be used for preparer compliance got spent instead defending a lawsuit challenging IRS right to ensure preparer compliance. Now another lawsuit, and who's going to pay for that? I think the intent is to distract IRS from doing its job.

Is it just me that finds it staggering that the current professional certification in the tax profession is controlled by the IRS?

I absolutely agree and I've said so before. It's a terrible conflict of interest - we sit at one side of the table representing our client, the IRS sits on the other side, and the IRS stands over us. Would there be an uproar if taxpayers realized the situation?

I'd agree in part, Frank. I think the intent is to remind the IRS that Congress writes the rules, not Treasury and not itself. With the best of intentions, the Service and Treasury overplayed their hands and now they're being called to account in court.

I renew my EA license & pay that fee, there's no reason for this anymore.

The EA 3-yr renewal fee was decreased as an offset to the annual PTIN fee. If the PTIN fee were to go away, I suppose the EA renewal fee would go back up to $125.

The money that was collected to be used for preparer compliance got spent instead defending a lawsuit challenging IRS right to ensure preparer compliance.

Well, there is now a CE tracking database and a PTIN registration system, so some of went to pay for that, I think.

So what can we, as a profession, do to enhance standards and remove the incompetents?

Now, please think about this before hitting the "Reply" button. I have to query what the EA designation actually means. Seriously. Let me explain. I am going through the EA review course via the North Carolina Society of Enrolled Agents. I took Part I (Individuals) about six weeks ago. It took me 56 minutes to answer all 100 questions and pass. I took Part III (Ethics, Representation and Practice) three weeks ago and passed in 28 minutes. It really shouldn't be that easy to pass a 3.5 hour exam. One other person in the class has finished both exams in roughly the same amount of time as me and two others have taken two hours at most. Remember, this is an exam set by the IRS.

Although the course itself has been very helpful, that is down to the materials, instructor and a good group of students. In both exams, I found I was way over-prepared. Why should the profession accept this and, if the public (tax-paying and professional fee-paying) gets to know about this, why should they?

Well, there is now a CE tracking database and a PTIN registration system, so some of went to pay for that, I think.

Exactly. So the program is not all for naught. Yet we have a lawsuit to put an end to progress. Why is that? What real benefit could possibly come from this? Who stands to gain?

I think the intent is to remind the IRS that Congress writes the rules, not Treasury and not itself. With the best of intentions, the Service and Treasury overplayed their hands and now they're being called to account in court.

Ah, yes. Congress could clarify the matter with a rather simple piece of legislation - "there shall be no regulation of tax preparers". End of story and would save a lot of trouble both on the part of IRS, and with the court system trying to figure out what the legislature wants. It does seem like some kind of structure is desired. As with presidential executive orders, if the Congress won't do the job, someone else will find a way to get it done.

I don't understand the necessity for annual renewal of the PTIN other than a method to tax us without calling it an additional tax.

I think the PTIN fees are supposed to fund the relatively new RPO (return preparer office) but, as someone else mentioned above, they are getting used for defense. I personally wish the lawsuits would stop. No matter how you slice it, it's our tax dollars they are spending, and the dollars could be put to much, much better use.

I wish they would have kept the RTRP and made it voluntary. The exam wasn't badly designed, and it was already set up with Prometric, etc, etc. But whatever.

So what can we, as a profession, do to enhance standards and remove the incompetents?

Now, please think about this before hitting the "Reply" button. I have to query what the EA designation actually means. Seriously. Let me explain. I am going through the EA review course via the North Carolina Society of Enrolled Agents. I took Part I (Individuals) about six weeks ago. It took me 56 minutes to answer all 100 questions and pass. I took Part III (Ethics, Representation and Practice) three weeks ago and passed in 28 minutes. It really shouldn't be that easy to pass a 3.5 hour exam. One other person in the class has finished both exams in roughly the same amount of time as me and two others have taken two hours at most. Remember, this is an exam set by the IRS.

I almost hate to hear this. It has been many years since I took the exam (1985 I think!) but at that time it was four 4-hour tests and if you got done in less than 3.5 hrs, you were a real standout. All 4 tests were only offered once a year in each locality, and if I remember correctly were held on 2 consecutive days, and you had to pass all 4 to pass. Probably one of the toughest tests I've ever taken (and I've taken alot! lol).

So, hopefully you are a prodigy! I would hate to think the tests have gotten that easy, it would just dilute the respect we deserve for earning the credentials, to say nothing of the knowledge of current passing EA's. IMHO.

I would hate to think the tests have gotten that easy, it would just dilute the respect we deserve for earning the credentials, to say nothing of the knowledge of current passing EA's.

The tests haven't gotten "that easy"-- Part 2 (Businesses) is still a monster with a very low pass rate. It makes sense that someone with tax experience would pass Part 1 easily (I did, too, after 5 years of tax experience and 4 years of accounting classes), and Part 3 is the ethics portion and is basically common sense is you bother to read Circ 230.

Part 2 is pretty tough, and spans all areas of tax law, including nonprofits, trusts, and estates, which not very many tax pros even do.

I will say that the REG portion of the CPA exam was definitely harder, but that's because the CPA exam isn't all multiple choice. You've got to do reconciliations, a Schedule M-1, etc.

Still, I'm happy that there's an EA designation, and I think the exam is appropriate.

On the subject of registration, I met a bunch of preparers at the IRS tax forum in 2012 who couldn't even pass the RTRP exam, which I thought was very easy. One lady "had been doing taxes for 10 years" and failed it--TWICE. That gives you an idea of why the IRS wants to regulate preparers. There's a lot of people who have no idea what they are doing and can't even answer basic tax law questions.

I think the SEE is appropriate for a return preparer exam, but it misses the mark for actual representation. If I had my way, we'd have a unified Federal tax bar consisting of return preparers taking the SEE and everyone else taking a test that is midway between the SEE and the Tax Court Exam. (By "unified", I mean no more Title 5 carveouts for CPAs and attorneys.) It would be great if this exam included reconciliations, statutory construction and regulatory interpretation, substantial authority analyses, etc. Too much emphasis is put on knowing things, not enough on how to get the right answer.

I think the SEE is appropriate for a return preparer exam, but it misses the mark for actual representation.

Of course it does. Of course it does. The IRS doesn't have a vested interest in a bunch of enrolled practitioners with fantastic representation skills running around, do they?

No, they want you to do their EITC due diligence for them, and file hundreds of information forms so they can use their matching program to police other people's income, and they want to threaten us with preparer penalties up the wazoo, but they don't really want us to be knowledgeable about taxpayer rights, or be able to represent taxpayers before the tax court (which we used to be able to do), and all the other things that make collection activity harder for them.

[i]or be able to represent taxpayers before the tax court (which we used to be able to do)

I'm glad you said that. I am aware that EA's are not able to represent taxpayers before the tax court, but I could have sworn that when I got my EA in 1985 it allowed you to practice before the tax court (not that I would ever try!). I mentioned it once somewhere and was told I was full of daffodils.

Originally, lawyers and CPAs had to be EAs to do rep work. That went by the wayside in the '50s. Since the Tax Court Exam dates back to the '30s, I'm not sure about EAs being able to go to Tax Court.

I could have sworn that when I got my EA in 1985 it allowed you to practice before the tax court (not that I would ever try!). I mentioned it once somewhere and was told I was full of daffodils.

An Enrolled Agent's knowledge and skill certainly CAN gain admittance to the Tax Court bar. Examinations are held every two years. http://www.ustaxcourt.gov/forms/Admission_Nonattorney.pdf

As for the daffodils, Reminyl combats Alzheimer's so you might recommend it to your weak-minded advisor.