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Higher Standards for Tax Preparers

IRS Continues to Stress Importance of RTRP Testing and PTIN Renewal

Last November, the IRS began efforts to increase the quality of the tax preparation industry and improve service to taxpayers by requiring certain tax preparers to complete a Registered Tax Return Preparer (RTRP) competency test.  In the last few months, some 3,000 tax preparers have passed the exam with 6,000 more scheduled to test soon.  But that leaves approximately 340,000 tax preparers who have yet to make arrangements to test.

David R. Williams, director of the IRS Return Preparer Office, says encouraging these preparers to test is now a priority.  He attributes the lack of participation to simple test anxiety and normal procrastination, though there has been an increase in test registrations now that filing season is over.  Tax preparers with a testing requirement* are only required to pass the competency test once and must do so by December 31, 2013.

In addition to competency testing, non-exempt tax return preparers must also complete 15 hours of continuing education and renew their Preparer Tax Identification Number (PTIN) annually. The IRS plans to develop a public database later this year of all PTIN holders where they will specify any required credentials, including the new RTRP exam. The IRS hopes this new PTIN renewal requirement and database will give them a better idea of the number of paid tax preparers out there, and allow them to contact those preparers about testing requirements. The IRS has also established a Facebook page they hope will serve as a communication medium to make preparers aware of such information.

Williams was instrumental in the development of the new mandatory PTIN registration requirement for all federal tax return preparers.  He says, “We believe there are hundreds of thousands of preparers who prepare returns, and the vast majority are highly professional and committed to doing a good job.”  He continues, “Others run the gamut from not knowledgeable to actively fraudulent.”  He indicated the Earned Income Tax Credit is a prime area for inaccuracy or fraud. The IRS’s ability to track registered tax preparers coupled with the competency test requirement should cut down on these errors.  Williams believes, “these changes are improving the tax professional industry by establishing standards that promote competent and ethical tax professionals.”

*CPAs, attorneys, EAs, and non-signing preparers employed by law or accounting firms supervised by CPAs, attorneys, or EAs, as well as those who do not prepare the Form 1040 series, are exempt from testing.

 

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