Why is the tax return preparer competency test required?
The IRS Income Tax Preparer Competency Exam came about after the IRS conducted a Return Preparer Review which was published in December 2009. The review, found here, was the result of a dialogue between the Internal Revenue Service and interested parties including professional industry groups, consumer advocates, IRS advisory groups, tax software vendors, and according to the IRS, income tax return preparers of all types.
The recommendation for a preparer competency exam was only a part of the plan to increase over-site of tax return preparers. The Internal Revenue Service is also requiring electronic registration of all paid tax preparers under an expanded PTIN program, increasing compliance checks and bringing paid tax preparers under the same US Treasury ethical standards that IRS employees and other tax return professionals are held to currently. (Treasury Department Circular 230)
Who will have to take the Preparer Competency Exam?
Final regulations are still pending, but the IRS has signaled their intent to test all paid income tax preparers except:
- Attorneys
- Certified Public Accountants
- Enrolled Agents
Professional CPA groups and associations are lobbying the Internal Revenue Service to also exempt their employees who prepare but do not sign returns.
When will Income Tax Preparer Competency testing begin?
Currently, the exam is scheduled to begin in October of 2011 and will be administered by Prometric. There will be one test covering wage and non-business forms and schedules.
