IRS Return Preparer Review Continues to Expand

Three years ago the IRS announced groundbreaking measures to be taken in order to ensure the competency and regulation of tax return preparers. This effort continues to expand. The Return Preparer review, originally launched by IRS Commissioner Doug Shulman in June of 2009, is finally coming to completion. Many of the required steps will take full effect in the coming year. Below I will detail the highlights of the initiative along with important dates to remember.

PTIN Requirement
The use of a PTIN (Preparer Tax Identification Number) is now a mandatory requirement for anyone who is “paid to prepare, or help prepare, all or substantially all of a tax return.” This registration is also required for all enrolled agents. For more information on PTIN registration click here. This is mandatory NOW, so if you have not already received a PTIN you must do so. This is required on an annual basis and you must renew it each year.

Competency Test
An IRS approved and administered competency exam was launched in November of 2011. This is a 120 question exam designed to test the knowledge of tax preparers. All preparers (with the exception of EA’s, CPA’s, attorneys, and non-1040 preparers who are exempt) MUST pass this test no later than December 31, 2013 in order to remain in business. TaxSlayer Pro is currently working on ways to help with preparation for the exam for our customers. It is urged that you take the test as early as possible to allow time for a retake if necessary. Those preparers passing the competency test will be given the designation of Registered Tax Return Preparer. Beginning in 2014 only Registered Tax Return Preparers, EAs, CPAs and attorneys will be allowed to prepare tax returns for compensation. Furthermore, the IRS will maintain a public database so that taxpayers can verify that their preparers have met the new standard. The IRS will actively educate taxpayers ONLY to use those who are approved.

Continuing Education
All preparers subject to the testing requirement will now also face a continuing education requirement. Effective January 2012, and applying to even those preparers who have yet to take and/or pass the competency test, preparers must complete at least 15 hours of continuing education each year. This 15 hour requirement must include 10 hours in federal tax law, three hours in federal tax law changes and two hours in ethics. The IRS provides more information on sources for CE here. TaxSlayer Pro also offers continuing education credits through our website.

Ethics Compliance
All returns preparers are now subject to ethics requirements that once only applied to CPAs, EAs and attorneys. All paid preparers are now subject to a tax compliance checks and beholden to the standards outlined in Circular 230.

This program is finally taking shape and will provide a great stability to the industry. TaxSlayer Pro will continue to update you as information and/or changes are made public.