Be careful what you ask for. When the IRS requested comments by July 7 on the competency examination, I am sure it was hoping for more thoughtful responses than some that have been submitted. For example, one commenter took the view that the IRS should force all return preparers to get an accounting degree. We are confident this commenter had earned an accounting degree and believe that only preparers created in his own image are sufficiently worthy to preparer returns for others.
Thankfully, some comments were more thoughtful. The middle ground in the comments seems to be that the competency test should be mainly multiple choice, should focus on common errors found in the Form 1040 series, and be offered frequently enough that preparers who fail can take the test again quickly. Preparers also said they did not want to have to travel too far to take the test.
CPAs, attorneys, and enrolled agents, who have always had to pass a test at the state level or with IRS, are not subject to the new IRS testing scheme. They were not hesitant, however, to express their views on the standards that should apply to their tax return preparation competitors.
Enrolled agent Lawrence Rogers said the test should be very hard. “If it is not, there is no reason to have people take it at all,” he said. Perhaps in response to Mr. Rogers’s comment Susan Santora, a tax preparer from Santa Monica, Calif., wrote in: “This is a competency test, not the enrolled agent exam.” Right back at you, Larry!
Individual taxes, sole proprietors, and Circular 230, are the top three areas that should be tested, said Anthony Curatola, a professor of tax and accounting at Drexel University. In addition to a general multiple choice format, he recommended some tax calculations requiring a person to pull up tax tables or specific forms such as an earned income tax credit checklist. Furthermore, since many of the registered tax preparers are using tax software, he suggested some questions be geared toward an understanding of the concept associated with tax liability instead of just calculations.
The New York State Society of Certified Public Accountants strongly believes that a practical section involving the preparation of a sample return is essential. In addition there should be one short essay question to test the applicant's ability to communicate tax concepts to clients, President Richard Piluso said. [NSA comment: there will be no essay questions on this examination].
Maria Taylor, of Abington, MA, commented that she has been preparing her neighbors’ and family members’ taxes for 30 years, and said if IRS wants to eliminate small practitioners, it is now moving in the right direction. She wrote that she tries to keep informed about all the changes as best as possible. Should I be required to take courses, she asked? “If it can be done free of charge & like we do now with the Webinarsundefinedyes! If not forget it.” She concluded that, if the real aim is to improve the services offered to the public, the answer is to just enforce the regulations that are in place now. NSA note to Ms. Taylor: “Forget it” may not be sufficient with respect to continuing education. See the mandatory annual education requirements in the revised Circular 230.