Is Your CPA REALLY the Right Person to be Completing Your Tax Return?
Is your CPA REALLY the right person to be completing your tax return? Did you know that there are different educational requirements for different types of tax preparers?
Maybe you have heard maybe not. The IRS is beginning to mandate preparers who complete your tax return. Yes, if you use a paid tax preparer there are rules that are being mandated by the IRS. These regulations/rules are being put in place in an effort to assure you that you are getting the best possible return from a knowledgeable trained preparer.
- The IRS will require all individuals who are required to sign a federal tax return as a paid tax return preparer to register and obtain a preparer tax identification number
- The IRS will establish competency testing for all paid tax return preparers required to register with the IRS except:
- certified public accountants, or
- enrolled agents
- The IRS will require 15 hours of annual continuing professional education, including three hours of federal tax law updates, two hours of tax preparer ethics and 10 hours of federal tax law topics, for tax return preparers who are required to register. However, the continuing professional education requirements will not apply to:
- certified public accountants,
- enrolled agents, or
- others enrolled to practice before the IRS.
The IRS will place all signing and non-signing tax return preparers under Treasury Department Circular 230.
Wait a minute…
Now I understand why an EA (Enrolled Agent) doesn’t need to be retested or subject to the annual continuing education every year. IRS already requires a very extensive four-part test to become an EA, and Enrolled Agents are required to take 72 hours of continuing education during the 3-year enrollment cycle. CPAs aren’t tested, on tax law, or required to take continuing education covering Tax issues? Attorneys aren’t tested or required to take continuing education covering Tax issues either?
The official IRS philosophy is basically one that CPAs and Attorneys are already held to strict guidelines and CPE regulation from their perspective associations and would apply undue responsibilities on them. They say it would be redundant.
A CPA (Certified Public Accountant) once they pass the CPA exam is automatically a tax professional? A newly appointed Attorney who has just past the bar exam is automatically a tax professional?
The Registered Tax return Preparer will be required to complete 15 hours of educational programs annually:
- 3 hours federal tax law updates
- 2 hours preparer ethics
- 10 hours federal tax law topics
Again, Attorneys, certified public accountants are exempt from this.
Okay, I want to point out that each year CPAs, and Attorneys have required CPE that they must maintain regularly so that they can maintain their status; however the CPE isn’t required in the tax law topics or updates. And the Ethics requirement is the same (at least in MO) but the two hours is not yearly but bundled into a three year span. So the Tax Professional who is a RTRP, is required to have six credit hours of ethics, the CPA is only required to have two. And these vary from State to State. Meaning CPA’s are not regulated by the IRS, but by the states they are in. And this means they don’t have to keep up with tax law or the changes to be a CPA.
This is a problem when people are able to prepare your returns and not be required to keep up with tax law changes, or even tax topics in general, and are held with more esteem in regards to taxing issues then those who spend all their time learning all there is about tax to get you the most accurate return prepared that is possible because they have spent the time learning tax law updates along with tax topics. Not to mention they are required to have CPE in tax law and tax law updates.