Proposed New Requirements for IRS Registered Tax Return Preparers (RTRP) Explained

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Changes Explained | FAQs | Exam Spec. | RTRP Videos | CPAs & PAs? | CFPs? | CTEC? | Important Dates

Tax return preparers that are compensated for federal tax returns will be subject to new requirements from the IRS as of 2011. The requirements include the following:

• Registration (Began in mid-September 2010)
  • This is required for everyone preparing tax returns
• Testing (Began November 2011)
  • Registered tax preparers only.  Attorneys, certified public accountants, and enrolled agents are exempt.
• The Supervised Preparer Exemption
  • A supervised preparer is not required to sign tax returns as a paid tax return preparer, and does not sign tax returns. A supervised preparer must be employed by firms that are at least 80 percent owned by attorneys, CPAs, or enrolled agents. In order to qualify as a supervised preparer supervision of return preparation must be performed by an attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary who also signs the returns. A supervised preparer is required to have a PTIN, and must upon renewal of the PTIN; provide the valid PTIN of their supervisor. A supervised preparer cannot sign tax returns, represent taxpayers before the IRS, or claim to be a registered tax return preparer or a Circular 230 practitioner.
• The non-Form 1040 Series Preparer Exemption
  • A non-Form 1040 series tax return preparer simply put, does not prepare, or assist with, Form 1040 series tax returns for compensation. In order to receive or renew a PTIN, the preparer must certify this status. Unlike a supervised preparer, the non-Form 1040 series preparer can sign any tax return they prepare or assist in preparing. He or she may also represent taxpayers before certain employees of the IRS during an examination, if the individual signed the tax return for the taxable year under examination. Like a supervised preparer, a non-Form 1040 series preparer cannot claim to be a registered tax return preparer or a Circular 230 practitioner.
• Continuing Education (2012)
  • Registered tax return preparers only.  No additional education requirements imposed on attorneys, certified public accountants, or enrolled agents.

As a Registered Tax Return Preparer here is what you’ll be required to do...

As of Friday, January 18, 2013, the United States District Court has enjoined the IRS from enforcing the regulatory requirements for Registered Tax Return Preparers. The IRS, working with the Department of Justice, continues to have confidence in the scope of its authority to administer this program. For now, the program requirements are voluntary and tests are not being administered. This may change if the IRS succeeds in its planned appeal or with the passage of new legislation.

First, Sign Up with the IRS Online.

Paid federal tax return preparers started signing up using the new PTIN system in mid-September 2010. As of January 1, 2011, all tax return preparers, including those tax return preparers who are attorneys, certified public accountants, and enrolled agents, must have PTINs if they prepare tax returns. The online sign up form will be available at http://www.irs.gov/taxpros/. The IRS is assessing an annual fee of $64.25 for the PTIN registration and $63.00 for renewal.

Every single professional that prepares and files tax returns must pay the $64.25 fee annually ($63 for renewals) and sign up for a PTIN using the new process even if you already have a Preparer Tax Identification Number (PTIN) number assigned from the IRS. If you already have a PTIN number, that number will stay the same in most cases.

Second, Complete an RTRP Competency Exam. Registered tax preparers only. Attorneys, certified public accountants, and enrolled agents are exempt.

Paid federal tax return preparers must pass an IRS RTRP competency exam to officially become a Registered Tax Return Preparer (RTRP). PTIN registration is very important because if you already have your PTIN before or during the 2011 tax season, you may have until December 31, 2013 to complete this exam and take the test an unlimited number of times until you pass it.

Prometric will administer the RTRP competency exams for the IRS. The test will have 120 questions consisting of multiple choice and true / false questions. Each person will have 2.5 hours to complete the entire RTRP exam. The fee to take the exam is $116, pass or fail. The test is open book in the sense that Prometric will provide individuals with Publication 17, Form 1040 and Form 1040 instructions as reference materials during the exam. Please visit our IRS Registered Tax Return Preparer (RTRP) Exam Specification page for specific topics covered on the RTRP exam.

Attorneys, certified public accountants, and enrolled agents are exempt from the IRS RTRP competency test requirement. Enrolled actuaries and enrolled retirement plan agents are exempt from the registered tax return preparer competency test requirement if they only prepare returns within the limited practice areas of these groups.

The Fast Forward Academy IRS Tax Preparer Course & RTRP Exam Study Guide + Practice Exams including both Wages & Small Business Returns 1040 Series is available here today!

Finally, Annual RTRP Continuing Professional Education (CPE). Registered tax return preparers only. Attorneys, certified public accountants, and enrolled agents are exempt from this new requirement.

A new continuing education requirement of 15 hours per year begins this year (2012). Per the IRS, courses will need to include 3 hours of federal tax law updates, 2 hours of ethics, and 10 hours of other federal tax law. This will not apply to attorneys, certified public accountants, enrolled agents, enrolled actuaries, or enrolled retirement plan agents due to their existing education requirements.

RTRP continuing education credit opportunities will be available from a variety of approved content providers, like Fast Forward Academy.  

Fast Forward Academy has several solutions to help Registered Tax Return Preparers navigate the changes...

• Stay Informed
  • Sign up on the right to stay informed as we will publish new information as it becomes available from the IRS
• Get Registered Tax Return Preparer (RTRP) Study Materials
  • Tax Course & RTRP Exam Study Guide + Practice Exams are available here today!
• Become an EA
  • Become an Enrolled Agent and bypass the IRS Registered Tax Return Preparer (RTRP) competency exam and continuing profesional education requirements
• Get Free Continuing Profesional Education (CPE)
  • Sign up now for 2 FREE credit hours of continuing education

Also read...
Changes Explained | FAQs | Exam Spec. | RTRP Videos | CPAs & PAs? | CFPs? | CTEC? | Important Dates