Two Deadlines Set for Passing the Registered Tax Preparer Competency Exam

The IRS continues to establish new rules and guidelines that apply to individuals who prepare tax returns for compensation. The IRS recently clarified rules regarding the deadlines for passing the Registered Tax Preparer Competency Exam. It seems the IRS is closing in on the term Registered Tax Preparer when referring to individuals who prepare taxes for hire and meet the new IRS requirements.

First Deadline for Passing the Competency Exam

The first deadline for passing the Registered Tax Preparer Competency Exam applies to tax preparers who obtain their PTIN prior to the first competency exam test date which the IRS projects to be mid-year 2011. The general understanding is that the competency exam will first be offered in June. Once the IRS sets the date for the competency exam, the exact cut-off date separating the two deadlines will be established. If you receive your PTIN (Preparer Tax Identification Number) prior to the initial competency exam date, you will have until December 31, 2013 to pass the competency exam.

Second Deadline for Passing the Preparer Competency Exam

The second deadline for passing the Preparer Competency Exam applies to those individuals who receive a provisional PTIN after the initial test offering date in 2011. Those individuals will be provided a provisional PTIN and must pass the competency examination and be designated as a registered tax return preparer to be permitted to prepare for compensation all or substantially all of a tax return or claim for refund.

The bottom line is that persons getting their PTIN early will be grandfathered until December 31, 2013, a comfortable three year window for passing the competency test. For those who register for the PTIN later than the initial competency exam test date, they must pass the exam prior to practicing for hire. Considering the seasonal nature of tax preparation work and that much of the work is part time, it makes us wonder if there will be a shortage of registered tax preparers who meet the new IRS regulations. The logical deduction is that Registered Tax Preparers who have passed the exam will be in demand.

Implementation of Rules Governing Tax Return Preparers

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