Beginning in September of 2010, the Internal Revenue Service implemented a system of regulating the tax preparation industry. This system would provide registration, testing, and continuing education (CE). The registration process required obtaining a Practitioner Tax Identifying Number (PTIN), and a fee of $63.00 per year. The testing, which would be required to be complete by December 31, 2013, comprises of a tax competency test covering basic tax knowledge and ethics. And finally, the CE requirements consists of 15 hours of CE.
Well, yesterday, all of that came to a halt when U.S. District Judge James Boasberg in Washington, D.C. ruled in favor of three individual tax preparers against the IRS. These three tax preparers had the backing of The Institute of Justice, a libertarian legal group based in Arlington, VA. The judge ordered a permanent injunction preventing the aforementioned requirements. The full court document can be viewed here: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2012cv0385-22
While I did believe that the IRS was over reaching their legal authority, I feel like taxpayers that seek professional help in preparing their tax returns deserve qualified and educated professionals. I’m not saying that just because you are not a CPA, Attorney, or Enrolled Agent you are not qualified to prepare taxes. I just think there should be some sort of regulation throughout the industry. I also don’t believe that these three individuals would have been unfairly put out of business due to these restrictions. In monetary terms, the requirements costs consist of $63.00 per year for the registration, $116.00 for the RTRP test, and the cost of CE. In a google search, I was able to find over 20 hours of CE for free.
I’m not sure if IRS will appeal this decision. If they don’t, I imagine they will try to persuade Congress to grant them the authority that the judge ruled they did not have to enforce this registration process. Until that time, anyone will be able to prepare tax returns.
If you hire someone to prepare your tax return, now may be a good time to check the credentials of the “professional” that you choose.