Tax Classes and Other Myths Targeting PTIN Registered Tax Preparers?

The new IRS PTIN regulations require paid tax preparers to meet new IRS rules in order to practice as a professional tax preparers. The regulations are easy to understand and are being phased in incrementally. In spite of clear guidance by the IRS for PTIN tax preparers, there has been a proliferation of misinformation on the Internet.

Myth #1 – If you didn’t get your PTIN by December 31, 2010 you can’t prepare taxes until you pass the IRS Competency Exam.

Not True: Paid Professional Tax Preparers can obtain a provisional PTIN until the initial testing date of the competency exam. The initial testing date has not been established as of the date of this post, but it is expected to be mid-year 2011. The IRS has issued guidance with regard to Provisional PTINs. It can be found here. The applicable rule states:

…an individual may be designated as a registered tax return preparer if the individual successfully completes a competency examination or otherwise meets requisite standards prescribed by the IRS.  The IRS, however, does not expect to offer the competency examination before mid 2011.  Therefore, to allow tax return preparers to obtain a PTIN and continue to prepare tax 10returns or claims for refund until the competency examination is available, the IRS, as an interim rule, will allow individuals who are not attorneys, certified public accountants, or enrolled agents to obtain a provisional PTIN before the date that the competency examination is first offered (“initial test offering date”). Individuals may obtain a provisional PTIN through the IRS’ new online PTIN application system or by submitting to the IRS a paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application.  The individual must annually renew the provisional PTIN and pay the applicable user fee.
Myth #2 – Professional tax preparers must take a tax class or tax course before getting a PTIN – Preparer Tax Identification Number.

Not True: Nothing in the new IRS Regulations for professional tax preparers require preparer tax classes or tax courses. The instructions to receive your PTIN are available here. You can also access the IRS instructions directly here.

Myth #3 – Professional Tax Preparers must take a tax class or tax course before taking the PTIN IRS Competency Exam.

Not True: The knowledge and experience of PTIN Tax Preparers varies greatly. Some preparers have been preparing income taxes for years and have a broad knowledge of 1040 related forms while others are relatively new to the tax preparation business. The IRS has left it up to each individual tax preparer to study for the competency exam in a way that fits their unique tax experience, Form 1040 knowledge level, and time commitments. We welcome you to test your knowledge using our Free Simulated IRS Tax Preparer Practice Exam. There is no requirement for PTIN preparer tax classes, tax courses or private certifications before taking the IRS Competency Exam, when offered.

Other study aids: Our Tax Preparer Study Guide will be available as soon as the IRS issues final regulations. You can also access our Free PTIN Tax Preparer Test Bank online now.

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