IRS Initiates Competency Test for Some Return Preparers

The Internal Revenue Service has begun a Registered Tax Return Preparer competency test in its next phase to improve the tax preparation industry. The new competency test is part of a larger initiative to increase oversight of the tax preparation industry by the IRS. Last year, the IRS required all paid tax return preparers to obtain a Preparer Tax Identification Number (PTIN). Over 750,000 tax return preparers have obtained PTINs. Those tax return preparers who currently have a valid PTIN and are required to take the new test (the IRS estimates approximately 350,000 people may be subject to the Registered Tax Return Preparer test requirement) will have until December 31, 2013, to pass the test.

Tax preparers who pass the IRS test and meet other requirements will be given a new designation: Registered Tax Return Preparer. In order to maintain that designation, the individual must renew their PTINs annually and complete 15 hours of continuing education each year. Enrolled Agents, Certified Public Accountants, and attorneys, are exempt from the new testing and education requirements that the IRS has imposed. The reason for these professional groups being exempt is that they already meet more stringent guidelines to obtain their professional credentials.

IRS Commissioner Doug Shulman commenting about the new competency test stated, “This is another major step forward in our effort to enhance tax preparation service to millions of taxpayers. People should feel assured that the person they hire to prepare their federal tax returns has a working knowledge of the tax code … The majority of tax return preparers are reputable professionals but the few bad apples cause great harm to taxpayers and the industry.”

The IRS will charge a $116.00 fee to sit for the test. The fee is meant to cover a portion of the IRS costs of administering the program as well as the cost for the third-party test vendor. The test covers preparation of the Form 1040 and its related schedules. The test will eventually be administered at more than 260 centers nationally, but the test is not available at all locations currently. Test sites will be added daily and international locations may be added in the future.

If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 19 years. Please call our office at (847) 705-7555 and ask for Brittany, to talk to one of our attorneys in the tax practice group and find out how we can help you.