California Tax Education Council
Important Registration Updates
Monday, August 2, 2010 - 39 commentsOn July 22nd, the IRS announced it will charge an annual $50 registration fee to obtain a Preparer Tax Identification Number (PTIN). The PTIN will be the new identification number for all paid tax preparers (includes attorneys, certified public accountants, CTEC-registered tax preparers and enrolled agents) who prepare and sign federal tax returns.
Comments
As of July 11, 2013, is it known whether the IRS will allow 2013 tax year PTIN renewal for 2012 CRTP's who did not already become RTRPs and who don't work for a CPA, EA, Attorney or actuary?
The RTRP program has been suspended and has no impact on CTEC requirements or the PTIN requirement. The IRS still requires all tax preparers to renew their PTIN each year.
What if I am not able to get all the money before school starts? Will I be able to still go to CTec? I have one more year till I i come there. I have heard its a nice school. Alot of my friends go there. I cant wait to go there.
CTEC is not a school nor do we offer courses. We only register tax preparers and approve schools that offer tax education courses.
Does CTEC have the right to determine moral character as a prequisite to "registration" as a CRTP, that is, no "certification" or "licensure," but merely ensuring proper bonding and eductional hours met? Stated differently, does CTEC have statutory authority to revoke a registration based on a criminal conviction (that itself has nothing to do with tax preparation duties or functions)?
CTEC’s legislative authority is basically limited to managing the registration of nonexempt tax preparers (i.e. making sure they have met the bonding and education requirements). If we understand your question correctly, CTEC cannot make a judgment call on who can and cannot be registered. The bonding companies are supposed to do a background check on tax preparers before they issue a bond. Some tax preparers have been unable to get a bond due to criminal activity, therefore, were unable to register with CTEC. However, that said, CTEC can revoke a registration if the tax preparer has been found guilty of misconduct by a government entity or professional regulatory agency. Hopefully this answers your question… feel free to call our office for more information (877) 850-2832.
Gina, in response to your question... Set up your corporation first. Then register for e-services and become an ERO under your corporation. Since you are not an Attorney, CPA, or EA, you will have to submit fingerprints to the IRS. Once that's done you can e-file Fed and CA returns through the corporation. The corporation can then in turn pay you out of its earnings and profits a fair wage for the services you have provided. So the clients should pay the corporation all the time.
CTEC, thanks for clearing that up. I'll take that into consideration in the future when I complain about CRTPs who are breaking the rules. The problem is these goofballs make hard working honest CRTPs look bad. They drag others down in the community as well. I'm glad CTEC is doing more to keep these people on check. Gina, I hope the best for you and your partner. I feel the current climate gives people the perfect opportunity to open up a new business with new ideas. Many people are shutting down and someone has to come in and cater to their former clientele.
Thanks Enrique but both my partner and I are CPA candidates, we just haven't completed taking all of the exams yet and in order to stay with the California requirements of being registered tax preparers for that part of our business we just wanted to be sure if our clients should be paying us directly because we are personally liable and registered with CTEC or if the could simply pay our company and we sign the tax returns. Thanks for your help.
Gina, If you perform professional services, you cannot form an LLC. Your best bet is the S Corp to avoid double taxation. The payments that you receive should be made to the company and the company should pay you wages fairly based on the work you perform for the corporation. I recommend you upgrade to an EA since CRTPs have enough trouble as is trying to get good accounts under their belt due to some of the jokers who roam around preparing tax returns fraudulently flaunting their CTEC certificate. CTEC does nothing to get these people off their list even after repeatedly emailing them complaints.
In response to Enrique... actually CTEC has recently changed its policy to get those tax preparers off our list. If you e-mail CTEC the name, FTB will investigate and, if everything checks out, CTEC will revoke their registration.
Thanks for your responses but I believe if you register your partnership as a LLP it would be assumed that you hold a “Professional” license or certification. My last question would be...if my partner and I were to both form an entity like an S-Corp and we are both CTRPs would our clients have to make checks payable to us individually because we are registered with CTEC or would they be able to pay our entity, the S-Corp? And if this is too much of a legal question can you suggest a corporate attorney that is familiar with forming entities with CRTPs? Thanks.
Hello, I took a class and i got my certification with a 79%. Im i able to registar to get my CTEC certificate? Please advise. Thank you so much.
As long as the education provider has uploaded the hours into our system and you have a $5,000 tax preparer surety bond, you are okay to register with CTEC. Please note education providers have 45 days from the date the course was completed to send the hours to CTEC. You should check with the education provider to find out if the hours have been uploaded.
Thanks for your response but I'm not sure if you answered my question regarding if a CRTP falls under the “Professional” definition for those who are required to register their corporation as a PC. This question is based on that fact that CRPTs are bonded and there are legal ramifications if you prepare tax returns in this state without being registered with CTEC. I tried calling the Secretary of State regarding this question and they were not able to answer this so I thought that at least CTEC would have some insight. Thanks.
There are different opinions regarding the definition of "professional." The law uses the term "tax practitioner" not "tax professional." However, as we stated earlier, CRTPs have met the minimum state requirements to provide a professional service. That said, we are not aware of any CRTPs who had problems starting either a professional corporation or LLP.
My business partner and I are registered with CTEC and we plan to form a corporation in California. Does the CTEC certification qualify for the definition of "Professional" when determining if we would need to form a PC (Professional Corp) or LLP if we were to form a partnership?
CTEC registration meets the state's minimum requirements to prepare tax returns professionally; however, CRTPs are not licensed or certified.
This new IRS rule and the CTEC's "helplessness" to speak for 80,000 plus California preparers are examples of why the ANGER towards the bureaucracy. I have been in business since 1990. Well, I am calling on my fellow tax preparers to contact me at winston@punla.net. If CTEC cannot speak for us, then let's form a lobby and start class action.
We would like to clarify that the 80,000 tax preparers INCLUDES attorneys, CPAs, CRTPs and EAs.
If I filed for BK this year, does this stop me from renewing my registration?
Not on CTEC's end as long as you can still get a bond.
I took & passed the Tax preparation exam Nov, last year. I did have PTIN, if I'm not practise in this upcoming 2010-2011, and plan to practise the following year, can I re-new the PTIN with IRS only the year I want to practise? I have not ever registered the CTEC. Can I register as needed? Or it has certain period after passing the exam to register with CTEC?
You have 18 months from the date you complete the QE course to register with CTEC. If you do not meet that deadline, then you will have to retake the course and pass the test again before you can register. Once you register with CTEC, you are required to renew each year even if you do not prepare tax returns that specific year. In order to meet your 18 month deadline, we suggest you register on or after November 1, 2010, which is the start date for the next CTEC registration cycle. As for your question regarding PTINs, we suggest you get clarification from IRS. Visit www.irs.gov/taxpros or call the PTIN line 877-613-7846.
CTEC registration When does the 2 hours ethics continuing education requirement came into effect?
The two hours of ethics is in effect now. You will need to complete the ethics requirement by October 31, 2010 in order to renew your registration.
Thanks for the response. However, the EFIN number has the same tracking information that a Ptin has. At least with a EFIN number I can track if someone steals it and uses it. Good luck with a PTIN number. Well as of today only 50,000 people have register with the IRS to get PTIN numbers.. What a joke. I also think now that the CTEC is not needed. In my eyes you guys failed and failed to lobby for our protection or grand father us. Thanks for indicating that the IRS study was not conclusive. It further proves that the CPA lobby groups wanted a clear and distinct advantage over tax preparers as we were actually providing a better business and price point. Shameful the IRS also cited bank products as the evil monster while at the same time completing a direct deposing in 21 days was the problem. If they could complete deposits in 2 days we could go back to doing tax return. Geez we will be doing tax return using our I PADS this year. Surely they can make a deposit in 2 days. Finally, hopefully someone would listen the IRS need to match W-2 information sooner than after October 15. That would stop a whole lot of fraud. Again this is 2011 people geez w-2 are electronically filed now but have the same timing as if businesses were still submitting data tapes.. Please what a joke. I hope the CTEC legitimacy is challenged in court as it really can no longer justify collecting fees or require us to register. The CTEC is a failure. !!!!!!
Please remember that what the IRS wants to do is entirely up to the IRS. Whether it is regarding EFINs or PTINs. Registration or no registration. CTEC is not a membership organization so it is not in our legislative authority to “lobby” for CRTPs. Oregon has an even more stringent program for tax preparers than California and their tax preparers will be required to complete the IRS education and testing requirements as well. It is also important to remember that the IRS program is focusing on 15 hours of federal continuing education. CTEC, however, requires 60 hours of qualifying education (state AND federal), plus bonding requirements, plus 20 hours of state AND federal continuing education. The California State Legislature firmly believes in keeping those state requirements intact. The fate and responsibilities of CTEC is entirely up to the Legislature, not CTEC. And with all due to respect, CTEC has accomplished and exceeded all of its responsibilities the Legislature has required. Since CTEC took over the program from the Department of Consumer Affairs in 1997, it has reduced the registration fee in half, created the most comprehensive standards for tax schools California has ever seen, established the most qualified team of curriculum reviewers for tax schools California has ever experienced, established an acronym (CRTP) so registered tax preparers can be easily identified, established an online reporting system for education providers to help enhance efficiency and accuracy, formed a enforcement partnership with the Franchise Tax Board, reduced the number of unregistered tax preparers from an estimated 10,000 to 5,000, and increased the number of CRTPs from 28,000 to more than 44,000. There is always room for improvement, of course, but to do all of the above in that amount of time with no financial support from state government should not be considered a failure. CTEC took a program, started it from scratch, built it up and will continue to build it up. The council has always strived to keep tax preparer fees to a minimum and will continue to work to keep it to a minimum.
I'm still concern that no matter what regulation are placed upon us, the amount of fraud that the IRS has charged Tax Preparers with still will not stop. There Electronic Filing system still has the same hole that caused the fraud in the first place. Now the Criminals are using online and box software to cheat. They do not need a PTIN number. LOL. I also find it silly that we all have EFIN number that has the same tracking and personal information that a PTIN number has except the IRS is charging money. What the difference in numbers ??? other than the IRS is making a ton of money. I now find CTEC a waste from two stand points 1). All my years of restering with CTEC it still did not prevent a bad perception of the Tax Preparation business and fraud. California was cited for being the worst state. Now the IRS is following the same business model of the CTEC that did not prevent FRAUD and bad Tax Prepares. WOW !! Let's tell the truth here the CPA's and there Lobbyist groups won and now have a clear marketing advantage in this business.
From CTEC's standpoint, the philosophy has always been that some education is better than no education. As for the government report that cited California as the worst state for bad returns, there were many unanswered questions in that report. For instance, it is important to note that California is estimated to have between 80,000-100,000 tax preparers as compared to Oregon (its tax preparer program also included in the report) that has an estimated 8,000 tax preparers. The report cited more than once that it could not specify if the bad returns were from attorneys, EAs, CPAs, CRTPs and/or unregistered tax preparers. It is an example for the many reasons why the IRS is requiring a PTIN for all tax preparers so it can start collecting data on who and where the bad returns are coming from.
The August CTEC News&Views page 3 says that "all individuals who are compensated for assisting with,...a federal tax return must obtain a PTIN...". "ASSISTING" is a broad term!! I am CRTP, but I have always thought that I wasn't required to be as I neither prepare nor sign the returns, just scrutinize them for errors or omissions...an educated "second pair of eyes" so to speak. Does the IRS consider that to be "assisting" that would require registration, testing, and a PTIN? I couldn't find a definitive answer on the IRS website. (I am the 2nd person in a two-person S-Corp. Person #1 is an EA.)
Based on what you said, yes, the IRS does consider what you do "assisting with" and will require you to register for a PTIN, complete continuing education requirements and pass the exam.
CA and Federal are both now requiring certification, education and CPE and bonding. This is very costly and overkill. Tax pros who have more competition from self-preparers using online tax software and those who are not filing due to recession and no income. Why should I pay $50 for the IRS to run a marketing campaign?
Is this a duplication of effort? Is this a duplicate of charges?
There will be IRS fees separate from CTEC fees, if that answers your question? And yes, there will also be IRS registration requirements all CRTPs must fulfill in addition to CTEC registration requirements.
One concern we have ran into with the new preparer regulation is regarding preparers who previously used a Individual Tax Identification Number (ITIN) to apply for a Preparer Tax Identification Number (PTIN). The IRS has stated that you will not be able to do this moving forward into the new preparer regulation landscape. One hurdle that they have not yet addressed is that of foreign preparers and how a Mexican resident, living outside of the US will be able to prepare a US tax return. We are tracking this constantly and trying to keep up on the IRS info relating to the new preparer regulations at www.federaldirecttax.com