The IRS Has Better Things To Do than the RTRP Designation

Recently, there has been some discussion in the tax blogosphere regarding the Registered Tax Return Preparer (RTRP) designation. The IRS wanted to make this a mandatory designation for unenrolled tax professionals (those who are not Enrolled Agents, CPAs, or attorneys). The IRS’s goal of a mandatory designation was challenged in federal court; the IRS lost last January and has appealed the decision (a ruling on the appeal is likely in the next few months).

New IRS Commissioner John Koskinen is proposing that if the IRS loses the court case that the RTRP designation continue as a voluntary program. Just last week the Taxpayer Advocate noted that the budget of the IRS needs to be increased. As I’ve said on a few occasions, that has no chance of happening until the IRS scandal is resolved. The IRS also noted that they may have to use funding from other IRS programs to administer ObamaCare.

Given that the IRS is short of funds, why should the IRS use precious funds to administer a voluntary program given that there are mandatory programs that they must enforce? Indeed, another point mentioned in the Taxpayer Advocate’s report was that identity theft programs at the IRS still need lots of work; that would be a far better use of any money gained by shutting down the mandatory RTRP program.

I also agree with Jason Dinesen: The RTRP program will hurt Enrolled Agents. There’s a saying among economists: If you promote something, you get more of it. If the IRS promotes the RTRP designation, there will be more RTRPs (to the detriment of EAs).

I do understand Robert Flach’s basis behind the idea of a voluntary organization promoting unenrolled (but skilled) tax professionals. I just believe that there’s no compelling reason that the IRS need be promoting this.

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