IRS proposes new tax preparer registration rules
As tax season approaches, tax preparers will face the first stage of new regulations implemented by the IRS. While tax preparers do receive proprietary training in most cases, the industry that is largely made up of seasonal employees has been sparsely regulated until now. While CPAs are certified, companies like H&R Block mainly employ seasonal tax preparers that do not require those certifications. All of that will change starting in 2011. The IRS is responding to an increased number of inaccuracies from previously unregulated tax preparers and they have already begun notifying about one million tax return preparers of the new changes taking place this upcoming season.
Starting January 1, 2011, anyone that receives payment for the tax preparation of another individual has to obtain an IRS Paid Preparer Tax Identification Number (PTIN) according to the IRS. Until now, anyone paid for preparing someone else’s taxes could use either their social security number or a PTIN issued by the IRS. A PTIN is a nine digit number that tax return preparers could obtain from the IRS to use on tax returns instead of their social security numbers. Tax preparers can register using the new PTIN registration system online at www.IRS.gov/taxpros. Preparers will need to create an account, create the PTIN application, and pay a $64.25 fee before receiving their PTINs. Preparers that already possess a PTIN will most likely retain the same number. The IRS noted that anyone paying for the services of a tax preparer deserves a certain level of assurance that their taxes are being filed properly.
The competency testing is scheduled to begin sometime in 2011. At that time, preparers will have to pass an exam in order to be designated as an IRS Registered Tax Return Preparer. After the testing requirements are satisfied, there will be continuing education for tax preparers to ensure continued compliance with federally regulated standards. As of now, this would include 15 hours of continued education over a three year period. The PTIN requirement is one of the main provisions in a new oversight program to help regulate the tax preparation industry. Anyone paid to prepare all or substantially all of any federal tax return or claim for refund must have a PTIN. The requirement applies to all tax return preparers, including those who are enrolled agents, certified public accountant, and attorneys according to the IRS.