Tax Matters

Congressional Tax and Budget Agenda

Balancing the Budget
The word that best summarizes the federal budgetary situation is gridlock. Congress and the President were unable to agree on a fiscal year 1996 budget. As of January 7, 1996, six of the thirteen appropriations bills necessary to run the government were passed and signed. In addition, the nation's debt limit has been increased via several temporary measures; the most recent signed on March 29, 1996, raises the credit limit to $5.5 trillion, which is believed to meet the government's financial needs into 1997.

Congress and the President presented budgets that were projected by the Congressional Budget Office to balance by fiscal year 2002. At the time of this writing, the differences between the two budgets were that the President's budget contained over $200 billion additional spending, and the Congressional budget contained over $200 billion in additional tax cuts over the seven-year period. Congress' budget bill reworked the spending approach for Medicaid and Medicare in the hope that both programs would remain viable into the next century. The President vetoed that reform and put off the day of reckoning.

In February 1996, the President submitted his outline for the 1997 budget. Currently, Congress is reworking its budget proposal to achieve balance in six years.

Balanced Budget Amendment
The core of the Congress' tax and budget proposals were contained in the House Republicans' "Contract with America" and the Senate Republicans' "Seven More in '94." The most important element on the budgetary side was the balanced budget amendment, which, some argued, would force fiscal responsibility on the Federal legislature. Others responded that it would remove from Congress the ability to set economic policy for the nation. While the House of Representatives passed a balanced budget amendment, the Senate fell one vote short of the required two-thirds majority. It is likely that Senate Majority Leader Bob Dole (R-Kan) will bring the balanced budget agenda back to the Senate floor for another vote before the 1996 election.

Line Item Veto
Another key budgetary element was the line item veto. The House passed one version of the line item veto, the Senate passed another. A conference committee was formed to hammer out the significant differences between the two bills, but the conference process stalled for the better part of 1995. On March 20, 1996, the conference committee approved final language for resubmission to the separate Houses of Congress.

The compromise, which was passed by Congress on March 28, 1996, to become effective January 1, 1997, will allow the President to veto direct spending; appropriations; targeted, revenue-losing tax provisions affecting 100 or fewer taxpayers; and transitional tax relief affecting 10 or fewer taxpayers.

The President must make his recision or veto known within ten days of passage. Congress then has 30 days to override the recision or veto. The override will take the form of a "disapproval bill" which would be subject to an expedited, 20-day legislative process. Any vetoes sustained would result in a set aside of the appropriated funds, which would be used for deficit reduction. The bill includes a sun-setting provision after eight years.

Tax Proposals
The tax proposals, after compromise between the houses, were contained in the Revenue Reconciliation Act of 1995 (title IX of H.R. 2491, the Balanced Budget Act of 1995), which was passed and sent to the President in the Fall of 1995 and subsequently vetoed. Key issues of disagreement included cost constraints intended to reduce the cost of Medicaid, Welfare, Medicare and lower environmental spending than the President had requested. Key tax provisions in the vetoed bill include-

<> $500 per child tax credit effective October 1, 1995 for joint-filing families earning $110,000 and less ($75,000 and less for heads of households) (The credit would phase out between $110,000 and $130,000, $75,000 and $95,000 for heads of households.)

<> return of the 50% net capital gain deduction beginning with sales after 1994 (The bill also would have permit indexation of the basis of investment assets acquired after and principal residences held on January 1, 2001.)

<> phased-in increase of the deduction of the self-employed health insurance deduction to 50%

<> phased-in increase of the amount that can be written off in one year to $25,000

<> significant IRA reform, such as allowing combined spousal IRAs to total $4,000, eliminating the rule that one spouse is not permitted to make deductible IRA contributions because the other spouse is covered by an employer plan, a new nondeductible IRA called the American Dream IRA, or AD IRA, which can be drawn upon tax-free after five years for certain special purposes such as the purchase of a first home, in the event of unemployment, or for educational or medical expenses. (The Senate bill contains similar provisions.)

<> numerous simplification provisions affecting S corporations, pensions, partnerships, and certain rules affecting sales of personal residences

<> Taxpayer Bill of Rights II.

The administration originally responded to the "Contract With America" tax provisions with its "Middle Class Bill of Rights," which includes-

<> a $500 credit for each child under 13 with a phase-out between $60,000 and $75,000 of adjusted gross income

<> a deduction for up to $10,000 of post-secondary education and training expenses phased out for taxpayers with from $100,000 to $120,000 of adjusted gross income, or AGI

<> expanding the eligibility for deductible IRAs to joint filers with AGIs as high as $80,000.

The administration's most recent tax proposal, part of the proposed 1997 budget contained these three provisions and a number of others including-

<> phased-in increase of the self-employed health insurance deduction to 50%

<> requiring a toll charge for large corporations electing S corporation status

<> eliminating lower-of-cost-or-market and components-of-cost inventory accounting for tax purposes

<> registration of confidential corporate tax shelters

<> reducing the 70% dividends-received deduction to 50%

<> eliminating the rollover of personal residence gain to the extent it is attributable to depreciation recapture.

Sources: "Contract with America," "Seven More in 1994," "The Middle Class Bill of Rights," Revenue Reconciliation Act of 1995 (vetoed), Revenue Reconciliation act of 1996, from the President's fiscal-year 1997 Budget Bill as proposed March 19, 1996.

IRS's "Financial Status Auditing"

The IRS Examinations Division initiated a program called "financial status auditing." Originally called "economic reality" auditing, the purpose of financial status auditing is the discovery of unreported income. Financial status auditing techniques are being used when the taxpayer is faced with questions such as the following taken from a list of 27 questions asked of a Connecticut CPA's client:

<> What is the educational background of taxpayers?
<> Purchase documents-application, closing documents, etc.-for home. Who is the mortgage holder? Payment?
<> How many autos do you own? What are they? What is the payment?
<> Do you own any large assets (over $10,000) besides autos and real estate? What is it, where is it kept? Is it paid for-if not, what is the payment?
<> Do you ever take cash advances from credit cards or lines of credit? How much and how often?
<> What cash did you have on hand in 1993 usually, personally or for business, not in a bank -at your home, safe deposit box, hidden somewhere, etc.?
<> What is the largest amount of cash you had at any one time in 1993?
<> Do you have a safe deposit box? Where? What is kept in it?

While in the past, some taxpayers were asked these and similar questions in certain circumstances, taxpayers in certain lines of business are now routinely barraged with dozens of these questions in the course of an ordinary IRS audit. Furthermore, the questions are asked at the beginning of the audit. In the past, such questions were asked only if the agent suspected tax fraud. In addition, taxpayers routinely are asked to complete Form 4822, Statement of Annual Estimated Personal and Family Expenses, in the beginning of the examination.

When defending their financial status approach, senior IRS officials insist that all they are doing is tying out cash as would be required for any audit conducted under the AICPA's own guidelines. This response, however, illustrates a failure to comprehend the effect that this change in auditing philosophy has on the professional responsibilities of the CPA. CPAs must now rethink how they should represent clients in an IRS examination.

Asking financial status questions at the beginning of an examination throws CPAs into a quandary. The nearly universal advice to CPAs when faced with a fraud audit is to tell the client to seek legal counsel. There are two primary reasons for this. First, rarely are CPAs schooled in the intricacies of criminal tax law. More important, communications between a taxpayer and a CPA, while confidential, are not privileged.

CPA are under an ethical obligation to maintain the confidentiality of any client communications in most instances. This means that the communications generally may not be disclosed without client permission. However, the ethical obligation ends if a court directs the CPA to disclose the communications.

On the other hand, confidential communications between a taxpayer and a lawyer (other than a lawyer who prepared the taxpayer's tax return) or a CPA hired by a lawyer in the course of an examination are protected by privilege. A privileged communication is a confidential communication, the disclosure of which cannot be forced by a court. The absence of a client-CPA privilege means that the CPA can be compelled to assist the government in the prosecution of his or her client. A CPA who continues to represent a client after it is clear a criminal investigation is contemplated by the IRS may have malpractice concerns. The problem for CPAs with financial status auditing is that there is no clue that a criminal investigation is not just around the corner. If CPAs represent taxpayers in financial status audits, even though criminal prosecution may not becontemplated by the IRS from the outset, the CPA is gathering and providing information to the IRS that will be used if a criminal investigation is later begun. An attorney representing the client in the examination would approach the matter differently. Fearing the worst, the attorney from the outset would build the strongest walls possible against the potential criminal investigation. The CPAs inability to use the legal tools required for a criminal tax audit, can have serious implications for both the CPA and the client, if the CPA continues to handle the audit without the advice of a criminal attorney.

Another troubling aspect of financial status auditing relates to business audits. Agents are now asked to assess the taxpayer business's internal control system. While at first blush this may appear prudent to properly adjust the scope of the agent's audit approach, on further reflection it is flawed. Here again, the IRS is relying on auditing literature published by the AICPA. That literature, however, is targeted at a CPA audience, a group of dedicated professionals schooled in the pragmatic interpretation of that literature in the conduct of audits. IRS personnel, while undoubtedly professional, do not typically have the schooling and on-the-job training appropriate to correctly interpret these auditing concepts. To a CPA, an inadequate system of internal controls means the scope of the audit must increase. To a non-CPA IRS agent, it could mean inadequate books and records. That, of course, would be an incorrect conclusion.

An AICPA task force was formed to communicate problems with financial status auditing to the IRS. The task force's message has been that if financial status questions routinely continue to be asked, CPAs will be forced to withdraw from the examinations process, turning the representation of taxpayers in that process over to the legal community. To date, the IRS appears to understand the task force's message and has promised to work with the CPA community to change its training materials. But the IRS does not show signs of retiring the program.

The AICPA's task force has drafted advice to the Institute's members regarding how to handle financial status audits. The advice given by the AICPA appears in the April 1996 The Tax Advisor.

Sources: Panel discussion and committee meetings at the Spring 1995 AICPA Tax Division meeting, interviews with AICPA task force members and "AICPA Offers Guidance on IRS Financial Status Auditing," The Tax Advisor, April 1996.

Tax System Overhaul

There is wide disaffection with the current federal income tax system. Furthermore, the federal government is grasping for new sources of revenue to either provide more social services or reduce the burden imposed by the income tax. Congress is seriously exploring a number of alternative tax systems to replace the current system. Most of these would tax consumption rather than income. Some tax consumption somewhat indirectly and look a great deal like income taxes. These include Congressman Armey's (R-Tex) flat tax and the USA tax sponsored by Senators Nunn (D-Ga) and Domenici (R-NM). Others tax consumption more directly, such as Congressman Archer's (R-Tex) comprehensive consumption tax, which many believe would be a type of sales tax, and the ever-present credit method value-added tax used by most of our trading partners.

In January 1996, the AICPA weighed in on debate over fundamental tax reform with the publication of its book, Flat Taxes and Consumption Taxes: A Guide to the Debate. Written by Martin A. Sullivan, an American Enterprise Institute economist, the book pulls together information on fundamental tax reform from over two hundred sources and outlines the open issues associated with each of the approaches currently under consideration.

The Flat Tax
This is the second time in as many decades that the flat tax has preoccupied members of Congress. The first time culminated in the passage of the Tax Reform Act of 1986, not exactly a model for simplicity. In fact, the complexity introduced in the '86 Tax Act is largely responsible for public frustration with the tax system today. In this second great flat tax debate, the commitment to a single low rate of tax again is wedded to an extensive tax-base-broadening effort, one that will result in many winners and many losers.

At first blush, the concept of a flat tax is very appealing to many in the nation's electorate who want to trade in all the tax system's complexities for a single low tax rate. But the appeal may wither on closer scrutiny. There is a lot of speculation about the impact of a flat tax. Some believe it will shift taxes from individuals to businesses, or from some industries to others. Others believe taxes will shift from low, state-tax regions of the country to higher-tax regions. Still others believe taxes will be shifted from home owners to renters, or from larger families to smaller.

On the individual tax side, Congressman Armey's proposal would impose a single tax rate of 20% in the first two years and trail off to 17% thereafter. It would tax only salaries and wages and pension income, exempting capital gains, interest, and dividends. The proposal calls for a standard deduction of $11,350 ($22,700 for joint filers) and a dependency deduction of $5,300 per dependent. There would be no other deductions.

Employee fringe benefits would remain tax exempt at the individual level, but would be nondeductible at the employer level except as noted in the next paragraph. Employees of tax exempt entities, however, would be taxed on their receipt of fringe benefits to make sure that there is a tax imposed on these benefits at one level.

On the business side, Congressman Armey would tax sales, rents, and royalties, but exempt capital gains, dividends, interest, and income from foreign operations. Deductions include all purchases (no inventory accounting); all capital expenditures (even land, no capitalization or capital recovery); compensation (without a $1 million cap); retirement plan contributions; repairs; rents; research and development; advertising; meals and entertainment (in a reasonable amount); and excise, sales, anduse taxes. There would be no deduction for income taxes, health benefits, or other fringe benefits.

All businesses would be responsible to pay this business tax, including partnerships, S corporations, and sole proprietorships.

Many believe that the recent demise of Steve Forbes' Presidential bid, which used the flat tax as its cornerstone, indicates a slowing of momentum for the flat tax. Nevertheless, elements of the flat tax are likely to receive strong consideration during any upcoming Congressional debates over tax reform.

The USA Tax
The USA Tax (USA stands for Unlimited Savings Allowance) is an income-tax-based consumption tax. The starting point is gross income, which includes wages, salaries, pensions, interest, dividends, and capital gains from the sales of homes, land, and any additional "nonfinancial" assets. Financial assets are checking and savings accounts, stocks, bonds, mutual funds, annuities, and similar items. From gross income, individuals deduct a family living allowance of $4,400 ($7,400 for joint filers) and personal exemptions of $2,550 per person. Further deductions are allowed for home mortgage interest, charitable deductions, alimony, and college expenses (up to $2,000 per year per student). There is also a "net savings deduction" for increases in the taxpayer's savings during the year.

The USA tax on individuals is not a flat tax. There are three brackets: 19%, 27%, 40%. The top bracket kicks in at $24,401 for joint filers and $14,401 for individual filers.

The USA Tax on businesses is imposed on all businesses, including partnerships, S corporations, and sole proprietorships. Income includes sales (excluding exports), rents, royalties (excluding exports), and imports. Excluded from the income computation are capital gains, dividends, interest, and income from foreign operations. Deductions include all purchases (no inventory accounting); all capital expenditures (no capitalization and capital recovery); repairs; rents; research and development; advertising; meals and entertainment (without the 50% reduction); and excise, sales, and use taxes (not income taxes). The most important aspect missing from the USA business tax's list of deductions is compensation. There is no deduction for compensation, retirement plan compensation, or fringe benefits. Interest would also be nondeductible.

In their recent study prepared for the Business Roundtable called Tax Restructuring, Price Waterhouse LLP noted that the USA tax, with its absence of deductions for compensation-related expenditures, will likely have a negative impact on labor-intensive industries. Proponents of the USA tax (and the Armey flat tax for that matter) counter that their proposed tax structure provide enormous incentives for capital formation. With their unlimited, one-year write-off for inventory and capitalizeable assets, this cannot be denied. Also undeniable is the unlimited ability to predetermine one's business taxes by simply increasing investment in capital assets, whether related to the business or not.

Sales Tax and Value-added Tax
Chairman Archer of the Ways & Means Committee prefers a comprehensive national direct consumption tax, perhaps in the form of a sales tax. The primary reason stated for this preference is that it would lead to a less intrusive government, perhaps one altogether without an IRS. The chief argument raised against the sales tax as a replacement for the current income tax system is the rate. Some estimates of the sales tax rate necessary to replace the income tax are as high as 27%.

A recent study by the Congressional Budget Office indicated that a 5% value-added tax would raise $608 billion between 1995 and 1999. The CPA profession has been tracking the debate over the imposition of this new type of tax. To date no concrete proposals for a VAT exist in Congress.

Sources: Flat Taxes and Consumption Taxes: A Guide to the Debate (AICPA, 1996), The CPA Journal, "Consumption Taxes: A View of Future Reform in America," April 1994, and "A Conceptual Analysis of the Flat Tax," July 1995, and Tax Restructuring, Second Edition, prepared for the Business Roundtable by Price Waterhouse LLP, June 1995.

Workload Compression

H.R.1661
The Tax Reform Act of 1986 generally required partnerships, S corporations, and personal service corporations (PSCs) to use calendar year ends. This change aggravated the first-quarter, workload-compression problem that had already existed for CPAs both in tax practice and accounting and audit practice. The problem was raised with Congress and in 1987, IRC secs. 444, 7519, and 280H were enacted. (Outright repeal of the calendar-year requirement, the solution desired by the CPA profession, was not achievable, due to revenue-neutrality requirements for tax proposals.)

On May 17, 1995, Congressman Clay Shaw (R-Fla) introduced the Small Business Tax Flexibility Act of 1995, H.R.1661. The bill, designed by the AICPA Tax Division Task Force on Workload Compression, allows any S corporation or partnership to elect any fiscal year. The proposal is a significant improvement over the current fiscal year approach, which itself is a morass of complexity. The bill, however, is not itself a model of simplicity. Complexities arise from two significant considerations: (1) the need for revenue neutrality, and (2) anti-abuse provisions to prevent taxpayers from "gaming the system."

The bill would create a new IRC sec. 444 (redesignating the current section as section 445). The new section 444 would permit any S corporation or partnership to elect any fiscal year. Personal service corporations, or PSCs, whose fiscal years are also restricted under a different part of the current statutory framework (section 280H), will require a different approach to their issues and are not covered under H.R.1661.

A business entity that elects under the proposed new section 444 would no longer be required to make a deposit with the government to reimburse it for lost revenue from the tax deferral occasioned by the fiscal year election. Instead, the electing entity would make quarterly estimated tax payments on behalf of its owners. The rate used to determine the tax estimates would normally be 34%, but if the entity is a "high average income entity" (HAIE), the rate would be 39.6%. A HAIE is an entity that flows through to its two-percent owners an average of $250,000 of "applicable income" during the immediately preceding 12-month taxable year (base year). Also, any partnership with $10,000,000 of applicable income during the base year is a HAIE. An entity with no base year uses the 34% rate.

Applicable income would be determined using the normal rules pertaining to S corporations and partnerships with some exceptions. For instance, entity-level charitable deductions reduce applicable income but partnership guaranteed payments do not.

Entity-level Estimated Tax Rules
An entity electing under proposed section 444 generally would need to make quarterly estimated tax payments. However, if those payments do not exceed $5,000 during the year, no estimates are required. Commonly controlled entities are treated as a single entity for purposes of determining whether the $5,000 de minimis rule applies.

Common control would occur when the same person or persons actually or constructively own 50% or more of the entities. Rules contained in IRC sec. 267(c) are used to determine constructive ownership for both S corporations and partnerships. Unlike rules used for controlled group purposes (the rules used to allocate corporate tax brackets and other corporate tax features among related corporations), the proposed section 444 leaves open the issue of determining common ownership when the common owners have varying interests.

The estimated tax payments would be determined using one of three methods: the 110% method, the 100% method, and the annualized income method. The 110% method is the default method. A quarterly payment under the 110% method equals one-quarter of 110% of the entity's base year "applicable income" times 34% (39.6% for HAIEs). Quarterly payments under the 100% method equal one-quarter of 100% of the entity's current year applicable income times 34% or 39.6%. This method only applies if elected by the time the first installment for the year is made. Finally, quarterly payments under the annualized income method equal one-quarter of the tax at the appropriate rate times the annualized income for the entity reduced by any installments made previously during the year. The annualized income method may be elected at any quarter, but the election continues through the end of the year.

If the proposal becomes law, estimated tax payments would be due on the fifteenth day of the 3rd, 5th, 8th and 12th months of the taxable year. Note that these estimates follow the corporate rather than the personal estimated tax due dates. The discrepancy was dictated by the cash-flow needs of revenue neutrality.

Special Short-year Rules
An additional estimated tax payment would be required for the short-year created by the election. This extra estimate is computed using the applicable income for the short period or the 110% method applied to the base year. Also, unless the entity is new, if there is a net operating loss for the short-year, it must be spread over the short-year and the two succeeding taxable years.

A new section 35 would be added to the tax code to handle the flow through of estimated taxes paid by the entity under section 444. At the end of the year, the estimated taxes paid by the entity would be passed through to the owners based on their allocable share of "applicable income."

Other issues addressed in the proposal include-

<> how to determine estimates if an electing S corporation was a C corporation during the base year.

<> entities in tiered structures are not permitted to elect fiscal years under the proposal unless all the tiered entities elect the same fiscal year.

<> in the event the entity fails to pay the estimated taxes, there is a penalty under a newly proposed section 6654A.

The bill was incorporated into the House version of the Balanced Budget Act of 1995 but was dropped in the Conference Committee due to its projected $364 million price tag. The stand alone bill, H.R.1661, currently has 76 cosponsors.

IRS Eases Rules for Automatic Extensions
In an administrative action that will help alleviate workload compression, the IRS made it easier during the 1996 filing season to obtain automatic four-month extensions to file individual income tax returns. For the '96 filing season, despite the instructions on the form, no signature is required to obtain automatic extensions. The IRS will process a taxpayer's Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, even if it is unsigned.

More importantly, the IRS is lifting the requirement to pay the balance due with the Form 4868 to obtain the extension. The taxpayer's ability to pay the balance due at the time of the extension request is no longer a requirement to obtain the extension.

This does not mean that there are no consequences for failing to pay any balance due by the April 15. If there is a balance due on the return when filed, it will still accrue interest and possibly failure-to-pay penalties from the original filing date. But even here, the IRS is lightening up a bit. If the taxpayer pays 90% or more of the tax shown on the filed return on or before the original filing date, the IRS will not impose the failure-to-pay penalty.

Although not given as a reason for making this change, easing the rules for automatic extensions is clearly an important administrative contribution to the cause of easing workload compression. The IRS is holding hearings on this approach on May 8, 1996.

Sources: H.R.1661 and TD 8651, Fed. Reg. __ (1/4/96), containing Temp. and Prop. Reg. secs. 1.6081-4T and 301.6651-1T.

Treasury and IRS Propose Entity Classification Revolution

On March 29, 1995, the Department of the Treasury and IRS released a notice soliciting public opinions about a proposal to replace the current rules used to classify unincorporated entities. The proposal would simply allow any unincorporated entity (such as a partnership or limited liability company) with two or more owners to elect whether to be taxed as a corporation or a partnership.

The proposal would replace the 40-year-old regulations issued under IRC SEC. sec. 7701 that define the difference between partnerships and corporations based on the presence of three or more of the following factors: limited liability, free transferability of ownership interests, centralized management, and continuity of life. The notice acknowledges this approach was based on the historical differences between corporations and partnerships which are significantly eroded with the introduction of LLCs and LLPs. "Taxpayers and the Service, however, continue to expend considerable resources in determining the proper classification of domestic unincorporated business organizations," noted the Treasury Department.

The proposal would allow entities to prospectively elect their tax classification. Non-electing entities would be treated as partnerships until an election to the contrary is made. A change in election would be treated as a corporate liquidation followed by contributions to a partnership or a partnership liquidation followed by an incorporation, depending on which direction the new election goes, with all the tax effects incumbent in such a change. In addition to general comments on the proposal, Treasury invited comments on-

<> whether adoption of the simplified approach would be appropriate;

<> whether the simplified approach would result in a greater proportion of newly formed businesses choosing unincorporated organizations rather than state-law corporations;

<> the mechanics of the approach, including the election requirements, the classification of organizations that do not file an affirmative election, and transition issues;

<> whether the ability to elect to change the classification of an organization should be restricted, and if so, in what manner; and

<> the proper treatment of unincorporated organizations that have a single owner or member.

The proposal would not affect corporations, so current S corporations would be unaffected by the proposal.

Despite predictions from Treasury staff that the check-the-box proposal would be issued by the end of 1995 in the form of proposed regulations, the regulations have not seen the light of day. Reportedly, the main hold up is perceived potential for abuse of the new rules by foreign-owned entities.

Sources: IRS Notice 95-14, 1995-14 IRB __ (April 3, 1995).

Registration of Commercial Tax Return Preparers Proposed

The Commissioner's Advisory Group, or CAG, consists of representatives of a number of IRS stakeholders, including among others, the CPA profession, lawyers, and software developers. The CAG's purpose is to assist the IRS Commissioner with projects she deems helpful in improving the tax system. At the CAG's September 13, 1994 meeting, a subcommittee reported on a proposal to regulate commercial tax return preparers. While still in the exploratory stage, the CAG suggestion calls for the amendment of Circular 230 to provide for "registered commercial tax return preparers" (RCTRPs) and "advanced registered tax return preparers." In addition to registration, RCTRPs would be required to meet a 24-hour-per-year continuing education requirement. Advanced RCTRPs would have to take an examination and complete 36 hours of continuing education per year. A grandfathering provision would allow Advanced RCTRPs to receive their designation without examination if they register and complete the 36-hour continuing education requirement for three years running.