On February 11th 2014, the U.S. Federal Court determined that the IRS lacked authority to mandate competency testing for paid tax return prepares (Loving v IRS). This would result in the refunding of around 89,000 test takers, each one to be paid the $116 fee that it cost to take the exam. However what seems to be a victory in the public eye, only helps the IRS to move forward with implementing a similar program in the future.
With the court's determination, it meant that the Registered Tax Return Preparer (RTRP) Certificate that was received is no longer valid, and doesn’t serve a purpose when dealing with the IRS. Tax Preparers will now have to participate in a new program in order to gain limited representation with their clients, known as the Annual Filing Season Program. However having passed the test isn't a complete waste. Anyone who passed the RTRP test only needs to meet their original 15 hour continuing education requirement each year to obtain an Annual Filing Season Program – Record of Completion.
Included in the Administration's 2016 budget proposal, the IRS would now gain authority to regulate all paid tax return preparers. This would include the oversight of all paid preparers, and the ability to enforce rules and regulations on those preparers. The goal in mind is to promote high-quality services from all tax professionals, improve voluntary compliance, and provide a sense confidence in the fairness of the U.S. tax system.
But what does this all mean for tax payers? The statute only really seems to be directed at tax preparers. The goal is to protect the tax payer from corrupt tax preparers. In essence it gives one reassurance that the people handling their tax matters must now be trained according to a national standard, instead of taking a leap of faith and hoping that matters were being taken care of in a professional manner. In the past, preparers only needed to take a test and they were certified with very few regulations. This is an effort to enhance the qualifications, as well as being able to regulate the everyday activities of these prepares in order to assure that they are operating in the correct manner. This statute will give a formal layout of training and guidelines of operation, so that everyone is on the same page, eliminating any grey areas. Of course this is still being reviewed by government officials, and has not yet been put into place. As a taxpayer myself it is assuring to know that Tax Preparers are now being formally trained and there is a set standard of how to practice professionally in what has been a shady business for some people in the past.
Refund recipients can expect a letter to be sent out May 28th, followed by a check of the full amount ($116), to be issued June 2nd. Letters and checks are being mailed to the return preparer’s address in the Preparer Tax Identification Number (PTIN) system.