**Update: The IRS rolled out the new testing requirement in late November 2011. Read more about the RTRP exam in this post.**
Last year, the IRS rolled out new requirements for tax return preparers effective as of January 1, 2011. Anyone who wanted to prepare a tax return for compensation after 1/1/11 was required to register for a Preparer Tax Identification Number, or PTIN. When the PTIN rules first went into effect, all you had to do to obtain one was register and pay the fee.
Beginning October 2011, certain categories of registered tax return preparers must also pass a competency test in order to obtain a PTIN. In the coming months, they will also be required to obtain continuing education hours annually.
Who is Exempt from Taking the IRS Registered Tax Return Preparer Competency Exam?
Only certain professionals who otherwise must adhere to stringent continuing education requirements (likes CPAs and attorneys) or those who don’t actually make any tax liability judgment calls on individual tax returns are exempt from testing requirements.
This includes the following people:
- Attorneys
- Certified Public Accountants
- Enrolled Agents
- Enrolled Retirement Plan Agents
- Enrolled Actuaries
- Supervised Preparers
- Non-1040 Preparers
All but two of these are self-explanatory. A supervised preparer is someone who works on a tax return, but doesn’t make any determinations related to tax liability and eventually turns the work over to an actual PTIN holder for review and signature. Non-1040 preparers are exactly that – people who don’t actually prepare any individual returns (with the exception of 1040-PR and 1040-SS).
IRS Testing Center Locations – Where to Take the Registered Tax Return Preparer Competency Test
The IRS hasn’t officially listed testing centers, but it has announced the Prometric will administer the tests. Candidates may also be required to provide fingerprints for background testing. Once testing goes live, you will be able to search available testing center locations from the Prometric website upon registration.
Assuming the test scheduling process for Registered Tax Return Preparers works the same as it does for IRS Enrolled Agents, candidates will have to register with Prometric in order to schedule a test.
How to Prepare for the Registered Tax Return Preparer Certification Test
The IRS does not offer a study guide, but there is a list of recommended study materials. As the PTIN is designed to indicate a person has a minimum competency level in individual tax return preparation and filing, the recommended study materials are all related to individual taxes and e-filing (the IRS’s preferred method of filing).
- Form 1040 and instructions
- Publication 17: Your Federal Income Tax
- Circular 230: Regulations Governing Practice Before the IRS
- Publication 334: Tax Guide for Small Business
- Publication 970: Tax Benefits for Education
- Publication 1345: Handbook for Authorized IRS e-file Providers
- Form 6251 and instructions (Alternative Minimum Tax – Individuals)
- Form 8879: IRS e-file Signature Authorization
- Publication 596: Earned Income Credit
Keep in mind that the version of Publication 17 currently available contains many notes about tax provisions that had not been finalized when the publication was published. As such, as you are reviewing that publication, you should also have a copy of this reference page out to help you determine the availability of certain tax benefits.
It is recommended that you study the most recent version of all forms, related instructions, and publications. Note that until approximately November/December of any given year, all that is available is the prior year’s forms, publications, and filing information. That’s when the IRS typically makes the current year’s forms available in time for filing season.
Important Facts About PTIN Requirements – Who Needs One? How Much Does It Cost?
There is a litmus test for helping you determine if you are required to obtain a PTIN: Basically, if you make any decisions regarding an individual’s tax liability (whether or not you sign the return), you are a tax preparer subject to these requirements.
Other PTIN requirement facts:
- Every preparer needs one – no sharing among office personnel.
- If all you do is work on your company’s taxes (as in corporate tax department personnel), you don’t need a PTIN for that purpose.
- If you help someone prepare a refund claim, you must be registered.
- How much does it cost? $64.25 annually :(
Related articles and links related to the new IRS tax preparer requirements:
IRS PTIN Registration – Who Needs a Preparer Tax ID Number? – A more in-depth look at who is and isn’t required to get a PTIN.
New IRS Tax Preparer Requirements – A little bit of background info and explanation of why the IRS believes PTINs are necessary.
Online PTIN Application – Link to the IRS website.
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{ 2 comments… read them below or add one }
Great article, I just given this onto a co-worker who was doing a little research on that. And he in fact purchased me lunch because I discovered it for him
I have been a tax preparer for approximately 21 years. I have passed the first part of the enrolled agents tests, but not the other two yet. I would like to be contacted when the tests are available for the registered tax preparers. Between being my mother’s caregiver and helping my daughter by babysitting 3 to 4 hours per day, I’m not getting as much studying done as I need to for the EA exams.