Encompassing Licenses?

[Snaggletoof]

I tried to respond to the thread below on Licensing Tax Preparers but couldn't find an appropriate place. The conversation has also morphed into a sales tax discussion.

How would our support change if, in new licensing plans, a preparer could NOT work under someone else's license?

Yes, let's go get that guy across town who is miserably inept at filing taxes and/or does so with unscrupulous approach. I hope I'm not accused of bashing but this is a real world we're discussing -- would there also be a requirement for those working in storefront operations to pass such a test instead of working under someone else's license? There are many poorly trained and inexperienced preparers in these storefronts, perhaps more bad ones than in all other places combined. In the case of H&R Block, only their commitment to quality control and review by their good preparers spares the public from fallout.

I remember the days when I was inexperienced too, and would not have been able to pass the EA exam had I taken it at the time. Some inexperienced storefront preparers today will be good preparers in years to come.

I hope this launches a discussion about the pros and cons of requiring ALL preparers to pass a minimal test for licensing versus allowing preparers to work under someone else's license. I am hoping for a meaningful discussion here and not some of the mudslinging at storefront chains that has occurred in the past. Some of this mudslinging has focused on the inexperienced preparers and has failed to give credit to the very good preparers in their employ.

For example, if a store location has a very competent manager who implements sound quality control practices, would it serve the industry well if the employees worked under that person's license?

[taxmandan]

How it works in Orygun

TheIRS studied our state licensing rules as a prelude to forming a proposal for national licensing. A beginning preparer has to complete 80 hours of approved basic tax class and pass a state exam on federal and state tax law and are licensed as a Licensed Tax Preparer. They must work under the guidance of an experienced person who is a "Licensed Tax Consultant". To attain LTC, if you are not an EA, requires a minimum of 785 hours of direct tax preparation work as an LTP, and then passing a much more complex fed/state exam. ALL preparers must be licensed, either an LTP or LTC unless they are a CPA or Attorney.

It works well for getting newbies some mentoring and definitely raises the barriers to getting into the business. You can't make much money working 3-4 months as an LTP for someone else each year. It takes several years to get the 785 hours so you starve unless you go for the EA, which eliminates the hours required. For several years now the number of LTCs has declined in our state. This means demand exceeds the supply and that helps get fees up to a reasonable level.

NTIKI: 62% of the people fail the first exam after completing the 80 hr course. 80-85% of the people fail the LTC exam in spite of their experience and often taking additional prep classes for the exam. I found the EA exam to be easier than our state exams.

[WhiteOleander]

One thing that comes to mind that the IRS may be using to get everything set up: I remember that last year (I think) they passed a rule that if a preparer gave another preparer help and info in the preparation of a return, the helping preparer could also be held liable for errors on the return. Even if they didn't sign it. So, perhaps the IRS is lining up to hold preparers responsible for people they allow to work under their name (license) and EFIN.

I find that the gov't rarely make rules for no reason. So, they may be getting ready to enforce the rules so the "invisible" preparers will find it harder to find someone willing to work with them.

Just a thought.

[MLINDER42]

Licenses

I worked for HRB for 2 yrs 8 years ago.There was no supervision of new preparers no one looked over returns before being filed.This was corporate owned district in a major metro area.During the summer we fixed a lot of returns and did PEACE OF MIND claims for many people due to poorly done returns.In the office I run now no return is filed without my checking it.My preparers are trained very well in low end returns which is most of our work all others I do myself or supervise the preparation.

[Burke]

Interesting. I worked for HRB for 5 years, 30 years ago. At that time, we were REQUIRED to check at least 3 returns per day prepared by other preparers, no matter how long they had been working or how much experience they had. We also had to shovel snow, pull past returns for the other branches, answer the phone if there was no receptionist, answer tax questions from the general public if we had the time. Ha!

[MLINDER42]

licenses

I think all that quality control disappeared with electronic filing.In this area most of the office managers for HRB are first year preparers.I still have friends who work for them and are very good preparers but would not be managers because they do better as preparers with less problems.

[taxmom34]

Burke , right on the money

you are so right. I did the same thing, retired 13 years ago. my biggest problem for the first 3 years was the **** "check tape", i worked HRB for 16 years, the last 12 years as office manager. for a few years we were allowed to have an in office checker, and at district meetings i kept getting asked why my office was the only one with no errors. my reply was "i have a good checker". when i left , we were computerized and checkers were out, they depended on the computer to check the returns.
Might i add, we had to make our own change,and make bank deposits.

[Roberts]

To get away from the HR Block spin-off:

I think the Oregon method is a very good method. You can't just let someone without any training work under a licensed preparer and expect change to occur.

I wonder if the IRS wouldn't handle it more along the lines of Securities and Insurance licenses and basically how the EA exam used to tested. You become licensed in a particular TYPE of return and can do only those. In the EA it was individuals, corporations and partnerships. Maybe there should be a different testing program for each and you are only allowed to sign returns that you are licensed to write up. We've all had growing pains as we branched out from the original individual returns we did. You can't learn corporate returns effectively in 80 hours of work.

If you have the CPA, EA or law license, you should be covered for all.

[Davc]

I think the Oregon method is a very good method. You can't just let someone without any training work under a licensed preparer and expect change to occur.

Actually, an unlicensed preparer may do taxes under OR law if as an employee of a CPA.

[MLINDER42]

encompassing licenses

Do EA's have the same rights of hiring unlicensed preparers?

[Roberts]

Actually, an unlicensed preparer may do taxes under OR law if as an employee of a CPA.

How many unlicensed preparers per CPA? I don't have a problem with some because the reality is that data entry is often handled by secretaries and staff personnel. What wouldn't be right is a single CPA running a staff of 15 preparers with very little knowledge.

[Davc]

Do EA's have the same rights of hiring unlicensed preparers?

No............

[Davc]

How many unlicensed preparers per CPA? I don't have a problem with some because the reality is that data entry is often handled by secretaries and staff personnel. What wouldn't be right is a single CPA running a staff of 15 preparers with very little knowledge.

No limit.The law specifically exempts those working for a CPA from the licensing requirement.

[Roberts]

No limit.The law specifically exempts those working for a CPA from the licensing requirement.

Well that's just silly.

[joanmcq]

But its the CPA signing the returns I'll bet. That's the way it is in CA; staff might preparer the return but the CPA is ultimately responsible for the prep. If you don't check it over before signing, you'd be an idiot.