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IRS Begins Tax Preparer Testing

IRS Begins Tax Preparer Testing in Miami

The Internal Revenue Service is moving into the second phase of its income tax preparer testing in Miami regulation initiative by beginning next week to schedule the first competency tests for income tax preparers. The IRS said Tuesday it is launching the new competency tests for Registered tax preparer as part of a larger initiative to increase its oversight of the income tax preparation industry. Last year, in the first phase of its efforts, the IRS required all paid income tax preparer in Miami to obtain a Preparer Tax Identification Number. Those income tax preparer who currently have a valid PTIN and are required to take the new test will have until Dec. 31, 2013, to pass the test. The third phase will involve continuing education.

Tax preparer in Miami who pass the test and meet other requirements will be given a new designation: Registered Income tax 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, CPAs, and attorneys, among others, are exempt from the new testing and education requirements. These professional groups already meet more stringent guidelines to obtain their professional credentials.

“This is another major step forward in our effort to enhance income tax preparation service to millions of taxpayers,” said Gutavo A Viera CPA. “People should feel assured that the person they hire to prepare their federal income tax return preparer in Miami has a working knowledge of the Tax Code. The majority of tax preparer are reputable professionals, but the few bad apples cause great harm to taxpayers and the industry.” That’s why it’s recommended you hire a CPA.

The fee for the new competency test is $116, which includes the IRS portion of the fee and the fee for third-party test vendor Prometric Inc. The test covers preparation of the Form 1040 and its related schedules. Test scheduling begins next week, but the initial test takers won’t receive their test scores for two to six weeks to allow the IRS time to validate the exam and determine the pass/fail cutoff. Once validation is complete, around mid-January, those taking the computer-based test will receive their scores at the test center immediately upon completing the test.

Prometric will eventually administer the test at more than 260 centers nationally, but the test is currently not available at all of the locations. Test sites will be added daily and international locations may be added in the future, the IRS noted.

Over 50 tax preparer  in Miami have obtained PTINs. The IRS estimates that approximately 350,000 people may be initially subject to the Registered Tax Return Preparer test requirement.

Fact Sheet 2011-12 provides additional details about the test, including which tax preparer are required to take it and how to schedule an appointment.

The IRS said it also continues to study the most appropriate ways for requiring certain tax preparer in Miami to undergo a background check. The background check is necessary to ensure tax preparer have not engaged in disreputable conduct and are suitable for practice before the IRS.  The American Institute of CPAs and other groups had objected to proposals for a fingerprinting requirement, and the IRS has backed off for now. The IRS said, however, that it would provide additional guidance concerning the background check in coming months.

While the IRS continues to review the issues surrounding the background checks, the agency said it would issue Registered Tax Return Preparer certificates to individuals who pass the competency test and a tax compliance check. Individuals who have been issued the certificates may begin using the Registered Tax Return Preparer designation, but they still may be subject to additional background checks that the IRS may implement in the future, the IRS warned.

The process for individuals to become an enrolled agent remains unchanged, the IRS noted. Most enrolled agents have passed a comprehensive three-part IRS test, known as a Special Enrollment Examination, covering individual and business standards and representation rules. Enrolled agents also must complete 72 hours of continuing education every three years. Most enrolled agents have unlimited practice rights before the IRS, which means they can represent clients regarding any tax matter.

The process for registering and taking the Special Enrollment Examination remains unchanged. More information on the Registered Tax Return Preparer Competency Examination and the Special Enrollment Examination is available at www.IRS.gov/taxpros/tests.

All PTIN holders must renew their PTINs for the 2012 filing season by Dec. 31, 2011, the IRS noted.  The PTIN renewal fee for 2012 is $63. Return preparers who obtained their PTINs by creating an online account should renew their PTINs at www.IRS.gov/ptin.

About the Author

Gustavo VieraGustavo A Viera is the managing partner of Gustavo A Viera, PA. His experience spans more than 25 years. He started his career in public accounting at PriceWaterHouseCoopers where reached the level senior audit manager. His Fortune 500 experience includes positions as CFO - Latin America Region for both Hewlett Packard and Telefonica of Spain. Gustavo also writes a blog twice a week that addresses trending accounting and tax issues. He is an SBA Advisor and teaches workshops for aspiring entrepreneurs. His office is located at One Alhambra Plaza Floor PH Coral Gables FL 33134, and is admitted to practice in the State of Florida as a licensed Certified Public Accountant. Gus welcomes questions and he can be reached at 786-250-4450.View all posts by Gustavo Viera →