UPDATE 1/10/14: Robert Flach has responded to this post with his own post, which you can find here.

In response to his question to me at the end of his post:

(D)oes this post change your opinion in any way? And what about my idea for a 2-tiered program?

I am opposed to the 2-tiered program. Any government-sponsored RTRP program — even a voluntary one — would harm EAs.

But I have no opposition to a third party taking over a voluntary RTRP designation. In his post, Robert addresses what would need to be done to make sure a voluntary RTRP overseen by a third party would actually have name recognition (as opposed to the ATA and ATP designations that already exist and that no one has heard of). I agree with him on how to achieve recognition.

But I think it would be a tough sell. How much demand is there, really, for the RTRP designation? Very few unenrolled preparers bothered to become RTRPs when it was required by the IRS. How many would become RTRPs if it was voluntary and overseen by a third party? Probably about as many as those who become ATAs and ATPs.

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(Original post from 1/8/14)

Robert Flach at The Wandering Tax Pro Blog asked for my opinion regarding the latest idea being floated about a voluntary Registered Tax Return Preparer designation.

The mandatory RTRP as envisioned by the IRS is headed to almost-certain defeat in the courts. But Robert is proposing that the RTRP be kept, but made voluntary instead of mandatory, with the IRS providing oversight (or alternatively, having a private organization oversee it).

And earlier this week, the new IRS commissioner said he favors the RTRP being made voluntary if the mandatory option is struck down in the courts.

The idea of a voluntary RTRP is bad because:

  1. What purpose would it serve? It would be a useless designation no matter who oversees it.
  2. If administered by the IRS, it would harm Enrolled Agents.

Wants Vs. Needs

Robert asked my opinion on Twitter a few weeks ago, and I responded saying that there’s no need for an additional designation. Just encourage the unenrolled to become EAs.

That led to the following exchange:

Robert is confusing “wants” with “needs.”

I can understand that some unenrolled might want letters after their name. But that’s a “want,” not a “need.”

What would a voluntary RTRP designation “do”? Creating a designation for the sake of having a designation is a bad idea — especially if it means giving the reins to the IRS to oversee!

And as I’ve said before, an RTRP overseen by the IRS would almost certainly push EAs even further to the fringes of the tax world.

Private Overseer?

What about having a voluntary RTRP designation under a private overseer, rather than the IRS?

We already have voluntary tax designations offered by the National Society of Accountants (the “other NSA”). NSA offers designations called Accredited Tax Advisor and Accredited Tax Preparer.

NSA is a great organization, and I’m sure the folks who have attained the ATA and ATP designations are proud of their accomplishment.

But both designations suffer because: 1) no one has heard of them and 2) they have no legal backing.

No one’s heard of the EA designation either, but at least being an EA gives me the legal force to do things on behalf of my clients.

A voluntary RTRP overseen by a third party would fall into the scrap heap with the ATA and ATP designations because it would have no legal backing.

Bottom Line

If you can prepare tax returns without being an RTRP, and if the RTRP designation doesn’t allow a person to represent clients, what exactly would people who achieve a voluntary RTRP designation do with it????? What’s the point?????

I think my initial “tweet” in response to Robert covers my opinion on this matter best:

https://twitter.com/dinesentax/statuses/408575845088108544

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”