The IRS has announced that it is finally moving into the next phase of its effort to improve the tax preparation industry by launching the new Registered Tax Return Preparer competency test (minimum competency exam).
The new competency test is part of a larger initiative to increase oversight of the tax preparation industry. Last year, the IRS required all paid tax return preparers (CPA, attorneys and Enrolled Agents included) to obtain a Preparer Tax Identification Number (PTIN). Those tax return preparers (non licensed in any capacity) who currently have a valid PTIN and are required to take the new test will have until Dec. 31, 2013, to pass it.
Preparers who pass the test and meet other requirements will be given a new designation: Registered Tax Return Preparer. In order to maintain that designation, the individuals must renew their PTINs annually and complete 15 hours of continuing education each year . Enrolled Agents, Certified Public Accountants (we have a 120 hrs every three years including ethics), and attorneys, among others, are exempt from the new testing and education requirements under this plan. These professional groups already meet more stringent guidelines to obtain their professional credentials.
“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,” said Doug Shulman, IRS Commissioner. “The majority of tax return preparers are reputable professionals but the few bad apples cause great harm to taxpayers and the industry.” So the IRS needs this stick to go after the bad apples… To bad the worst will not comply, will take only cash for payment and do so much damage the tax payer may be charged with tax fraud. I have just seen such a case, luckily they came to me before submitting.
Remember this is a minimum standards exam, like your drivers license; Multiple choice and open book.