Will Provisional RTRPs Be Able to Meet the Compliance Deadline?

At the IRS Tax Forum earlier this month and in a variety of other IRS sessions online and off, IRS revealed that very few people have actually taken the new Registered Tax Return Preparer (RTRP) exam.

Out of nearly 400,000 provisional PTIN holders, less than 10,000 have tested and complied so far. Starting September 1st, that means they have 15 months to finish their testing by December 31, 2013.

Think about it. That means more than 26,600 people will need to test during each of the next 15 months – or nearly 1300 per day (facilities are open 5 days/week)  – along with all the other candidate in all the other professions, like nurses, CPAs, firefighters, police officers, etc.

Prometric has 263 facilities around the U.S.A (and a few overseas). That means at least 5 RTRP candidates should be testing at each facility every day.

That’s manageable – if folks do test in each facility – and if they do start testing immediately. Of course, since most live in or near large urban centers…there’s likely to be quite a scramble for test appointments.

Worse, as a source at Prometric points out, if candidates wait until September or October of 2013 to start testing, Prometric will have a hard time accommodating 300,000 in only three months. (3 months x 4.25 weeks x 5 days/week = 63.75 testing days. 300,000/63.75 = more than 4700 people per day.) Oh sure, spread across all the facilities in the U.S., that only means about 18 people per day. But we all know the concentration will be in the large cities – and there simply won’t be enough seats. Candidates will have to drive 100 miles or more to a facility, or fly to a smaller town, perhaps in another state or country, to locate a seat.

Prometric recommends that if you do plan to wait until the last few months, you reserve your seat right now. At least you’ll be able to get a spot in a testing facility near you. If you end up having to reschedule more than 30 days before your appointment date, you’ll be able to do so at no charge.

Expensive Deadline to Ignore

What happens if they don’t pass the RTRP exam by December 31, 2013?

On January 1, 2014, provisional PTIN holders will lose their PTINs and be unable to efile, get paid to prepare a tax return or to do any substantive work on a tax return for a tax firm. At least not legally.

Folks working for themselves will lose their livelihoods – or they will be forced to hire an RTRP, EA or CPA  with an EFIN and PTIN to do the sole practitioner’s job until he or she can pass the exam and qualify. There goes all the profit.

Firms with staff they count on for much of the day-to-day tax work, won’t be able to let those key staff members touch a tax return.

Take the Test, NOW!

There’s really no need to put off the exam. After all, it’s an open-book exam. A tax professional with years of experience should be able to pass the exam relatively easily.

Well, maybe not so easily. There’s a twist to this exam that you won’t expect – and where there is no open book. A big chunk of the exam is on compliance – Circular 230. So study that and the exam will be easy to pass.

Feeling queasy about exam-taking and need help? There are dozens of courses, tools and materials to help you pass the exam. In fact, I am teaching a class next week at CPE Link and another in October.

What happens if you don’t pass when you take the exam this year or next? Nothing. Sure, you’re out $116 – but you can sit for the exam again, as many times as it takes to pass. So you have nothing to lose but a few hard-earned dollars. At least you’ll be able to continue to earn lots of dollars if you pass.

And remember, even if you only have a provisional PTIN right now, you’re still responsible for the 15 hours of continuing education. You’ll need proof of those CE credits in order to renew your PTIN this year.

Of course, if you’re planning to take the EA exam instead, skip the RTRP exam and study hard to get your EA well before Registered Tax Return Preparer deadline. If you don’t happen to finish all three parts of the EA exam – then you can join the last-minute scramble for the RTRP exam.   

This blog

Eva Rosenberg, MBA, EA, is the publisher of TaxMama.com, and author of the weekly syndicated Ask TaxMama column. She provides answers to tax questions from taxpayers and tax professionals worldwide.

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