IRS National Tax Preparer Registration Program - The Basicsby Lee Reams II in National Tax Preparer Registration
We have created this section to highlight the new Paid Tax Preparer Registration program and how it affects CPAs, Enrolled Agents, CTEC Tax Preparers and the new IRS regulated federal tax preparers. We will update this blog with the latest news and answers to your questions.
Note: At the time this article was written the long delayed revised Circular 230 had not been released. Information included herein is based upon public comments made by the Commissioner, OPR Director, RPR Director and other knowledgeable sources.
Who is Required to Register? All individuals (this includes currently enrolled practitioners such as CPAs, EAs and attorneys) who are compensated for preparing, or assisting in the preparation of, all or substantially all of a federal tax return or claim for refund or who sign, or are required to sign, a federal tax return or claim for refund as a paid tax return preparer must register and be assigned a PTIN or register their existing PTIN. The PTIN will be used as the registration number and will be deactivated for practitioners who fail to maintain the requirements of the registration.
When Did the Registration Begin? The initial registration process began in September 2010. The process is still available without passing an examination until such time as the examination becomes available which is currently estimated to be in the fall of 2011. The initial registration group will be required to complete an exam before they can renew their registration at the end of a 3-year period. Those that missed registration during the initial period will be required to pass the exam before becoming registered and issued a PTIN. Note: Enrolled Agents, CPAs and Attorneys and not subject to the examination process.
Tax Compliance Checks - All practitioners applying for or renewing their registration will be subject to tax compliance checks. The checks will determine if the applicant has filed all required tax returns, paid all liabilities or made proper arrangements with the IRS for payment of back taxes. Applicants who fail the tax compliance test may be denied registration and issuance of a valid PTIN. In addition, those failing will be referred to OPR for investigation.
Felony Question - As part of the registration process, applicants will be asked if they have been convicted of a felony in the past 10 years. If the answer to that question is yes, you will be required to provide additional details to OPR who will deal with each case individually. You will be issued a temporary PTIN while OPR investigates the facts of the case and decides whether to cancel or make permanent your PTIN.
Background Checks - Apparently all applicants are subject to an FBI background check.
How Do I Register? The IRS has contracted the registration process to a private firm. According to unofficial sources, the IRS will be mailing notices to practitioners that they are aware of on or about August 1, 2010 explaining the registration process.
Is There a CPE Requirement? Yes! A registered preparer must complete 15 hours of specified CPE each year. The CPE requirements begin January 1, 2011. The required CPE is as follows:
- 10 Hours in Federal Tax Law
- 3 Hours of Federal Tax Update
- 2 Hours of Ethics
Although CPAs, EAs and attorneys are required to register, they are not subject to the above 15-hour CPE requirement, since they are generally subject to the more expansive CPE requirements of their professional designation (license).
The CE is required to annually reregister. However, because the IRS has yet to establish guidelines or establish an approval process for CE providers it is anticipated the CE requirement for the first renewal registration will be waived and CPE will not be required until the 2012 year. (Caution CA and OR preparers - you are still required to meet your states CPE requirements for 2011). Of interest, the IRS originally planned for requiring renewals one year after the initial registration. It appears now that the renewal registrations will be on an annual calendar year basis.
Where Do I Obtain Approved CPE? Circular 230 section 10.6(g) specifies entities that can provide CPE under the registration process. ClientWhys is approved by the IRS Office of Professional Responsibility (OPR) as a CPE provider. ClientWhys has developed courses to specifically meet the 15-hour CPE requirement for registered preparers. Clientwhys is also an approved provider for the California and Oregon preparer requirements and have tailored courses to meet both the Federal and state requirements for practitioners in those states.
Ethical Standards - The IRS is recommending that all signing and non-signing tax return preparers be subject to the provisions of Treasury Department Circular 230, which will make them subject to discipline for unethical and unprofessional conduct. The authority granted to those individuals who either do not have professional licenses or who are not enrolled agents, enrolled actuaries or enrolled retirement plan agents will be limited to preparing tax returns and representing their clients as currently permitted during the examination of any return prepared by that tax return preparer. The ClientWhys course will include the 2-hour ethics element, including the Circular 230 requirements.
Competency Examinations - The IRS plans to develop two levels competency examinations:
- Wage and Non-Business 1040 Returns
- Wage and Business 1040 Returns*
This category will be expanded to include other small business returns in future years.
Individuals who pass a competency examination will be permitted to prepare and sign returns commensurate with the examination they passed.
Mandated E-Filing - As part of this program, the IRS is planning to mandate nationwide E-Filing as outlined below:
- During 2011, practitioners filing 100 or more individual or trust returns will be required to E-File.
- During 2012, practitioners filing 11 or more individual or trust returns will be required to E-File.
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