If there’s not enough initials to put after a professional’s (or a non- professional in some cases) name, there a new one to add. The IRS enacted requirements for those who prepare tax returns and are not a CPA, attorney, or Enrolled Agent. This new designation is a Registered Tax Return Preparer (RTRP).
This new designation was enacted to strengthen the industry and drive away fly by night tax preparers. Bottom line: this is meant to protect taxpayers, so it’s a good thing!
Why I like it
- Focus! The newly created designation is geared directly towards tax preparation….and rightly so! I like the fact that RTRPs should be competent in preparing tax returns, and this designation was designed with this single purpose in mind (not bookkeeping or other accountancy issues). In theory, a RTRP should be competent in the areas of tax preparation for individuals, which includes procedural standards, compliance, and ethics.
- Testing! This designation requires completion of a competency exam. The exam is proctored by Prometric, which again lends credibility to the designation due to the security requirements to take the exam. For example, an individual taking the exam is required to register for the test through the IRS PTIN (Preparer Tax Identification Number) system. On test day, the examiner (Prometric) will oversee the credibility of the person taking the exam.
- Continuing Education! The RTRP designation requires 15 hours a year in continuing education credits, which includes 2 hours of ethics. This 15 credit hour requirement is a nice step towards keeping the work force of preparers up to speed and compliant.
While this new designation is a great step in protecting taxpayers, it doesn’t mean mistakes and bad advice will be eliminated completely. I have seen enough poorly prepared tax returns to last me a lifetime. Most of the poorly prepared returns I have seen where not prepped poorly on purpose. Most of them were prepped that way because the preparer didn’t know any better. This designation (due to the competency testing and continuing education requirements) takes steps in decreasing this issue.
As a fee-only advisor, I see the importance of managing taxes. Every day in my practice I use methods to help my clients become efficient from a tax perspective, which is vital for financial health.
As a financial professional, which includes being a CFP®, I am committed to professional education and growth. With that I mind I am happy to report I recently passed the RTRP exam, and I look forward to continuing to offer excellent tax preparation for my clients.