Tax School 101: How to Become an IRS Registered Tax Return Preparer (RTRP)
What is a tax preparer?
The Internal Revenue Service defines a “tax preparer” as “a person who, for compensation, prepares all or a substantial part of a federal income tax return or claim for refund.
What are the recent changes to becoming an IRS Registered Tax Return Preparer (RTRP)?
The IRS requires all paid tax preparers to register with the IRS, pay a registration fee, and obtain a Preparer Tax Identification Number (PTIN). If you already have a PTIN, you still need to register under the new process. All paid preparers will need to register and obtain a PTIN before testing is available (mid-fall 2011), or they will not be able to prepare returns for compensation.
As of October 2011, tax preparers must pass an IRS competency exam to officially become a registered tax return preparer with the IRS. Individuals with PTINs before the test becomes available will have until December 31, 2013 to pass the IRS Proficiency Test and may take the test an unlimited number of times to pass. There will be a fee to take the test and that fee will be paid each time the person tries to pass the test. Once the tests are available, new tax return preparers will need to pass the IRS Competency Test before they can get a PTIN. The IRS will require proof of competency for all paid tax return preparers (except attorneys, certified public accountants, enrolled agents). The IRS will phase in three tests as follows: Year 1 – Salary and Non-Business, Year 2 – Salary and Small Business, Year 3 – Business Tax Rules. All preparers who register before the competency test becomes available (October 2011), will have three years, until December 31, 2013, to pass a competency test.
What are the fees to obtain a PTIN?
The IRS has an online registration system, paid tax return preparers pay a user fee of $64.25 the first year for a PTIN.
What is the difference between an IRS Enrolled Agent and a Registered Tax Return Preparer?
The practice of the IRS Enrolled Tax Return Preparer shall be limited to preparing tax returns for compensation and representing taxpayers at Examination when the return under examination was a return they prepared, while the practice of IRS Enrolled Agents will not be limited.
How do I become a registered tax return preparer with the IRS?
To become a tax preparer in California and Oregon, you must follow state guidelines as well as Internal Revenue guidelines. The State of California requires all salaried tax preparers to take a California Registered Tax Preparation Course – 60 Hour Qualifying Course and to register with the California Tax Education Council (CTEC). In addition to state requirements, the IRS requires an annual IRS competency exam. This is expected to begin in October 2011. Once a person has a valid PTIN and passes an IRS competency test, he or she will become a registered tax return preparer with the IRS.
How do I keep my registration up to date?
The IRS will require 15 hours per year continuing professional education of tax preparers to enhance their training as a tax preparer for all paid tax preparers (except attorneys, certified public accountants, and enrolled agents). The IRS will require that the 15 hours include three hours of federal tax law updates, two hours of tax preparer ethics, and 10 hours of federal tax law topics. Although there is no continuing professional education (CPE) requirement for 2011. The IRS continuing professional education (CPE) requirement will begin in 2012. Individuals who are registered tax return preparers and those who have provisional PTINs but have up to 31 December 2013 to pass the exam, you must earn 15 hours of continuing education courses from IRS-approved providers during calendar year 2012 and each year thereafter.
How are there other requirements?
Yes, the IRS may conduct fingerprint checks on some applicants in the future. All current applicants must include an explanation of any felony convictions within the past 10 years when applying for a PTIN.