Tax Preparer Certification: IRS Establishes New Standards

The new IRS Professional Tax Preparer Certification rules adopted in 2010 and becoming effective this year and continuing through 2013 establish new standards for Registered Tax Preparers as well as the requirements for PTIN Registration and Competency Testing.

Prior to the establishment of the new regulations for tax preparer certification, tax preparers were required to apply for a PTIN, but testing and registrations fees were not required. Now professional tax preparers must become certified by registering for a PTIN, paying the annual fee, passing a competency exam, and enrolling in continuing education.

New Burden for Mostly Part Time Workers

The tax preparation business is made up of mostly part time seasonal workers. Most professional tax preparers don’t work for CPA Accounting  firms, but work for large Income Tax Preparation firms like Jackson Hewitt or H&R Block. Others work for mom-and-pop tax stores. Most Tax Preparers work three or four months a year often for hourly wages plus commission. The new regulations for tax preparer certification establishes demanding standards of compliance for certification of part time workers.

Certified and Registered Tax Return Preparers are Professional Tax Practioners under Circular 230

The proposed Circular 230 regulations include registered tax return preparers in the definition of individuals described as practitioners and authorize these individuals to practice before the IRS. Practice as a registered tax return preparer generally is limited to preparing tax returns, claims for refund, or other documents for submission to the IRS and to limited representation as described below.  A registered tax return preparer may prepare all or substantially all of a tax return or claim for refund.  The IRS will prescribe by forms, instructions, or other appropriate guidance the tax returns and claims for refund that a registered tax return preparer may prepare and sign.

Professional Tax Return Preparers May Represent Clients during IRS Audits

Registered tax return preparers may represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the IRS during an examination if the registered tax return preparer prepared and signed (or prepared and was not required to sign) the tax return or claim for refund for the taxable period under examination.

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