California Tax Education Council
IRS Tax Preparer Requirements Update
Thursday, September 1, 2011 - 8 commentsThe IRS continues to work fast on a new plan to regulate tax preparers on a federal level. More new rules are set to start in the next few months, including fingerprint checks and the IRS competency exam. Nonexempt tax preparers who have a new or renewed IRS Preparer Tax Identification Number (PTIN) will have a three-year window to complete most of the new rules.
As of January 1, 2011, all tax preparers who prepare or assist with preparing federal tax returns for a fee must have a PTIN. CTEC-registered tax preparers (CRTPs) cannot renew with CTEC unless they have a new or renewed PTIN.
Originally the IRS announced that tax preparers must renew their PTIN each year on the anniversary date they first registered for a PTIN. The IRS has now decided to change that requirement. Instead, all tax preparers must renew their PTIN before December 31 of each year.
The IRS renewal cycle for PTINs is expected to start sometime in October. This means all tax preparers will have between October-December to renew their PTINs with the IRS.
What are the new IRS requirements?
The IRS is requiring all tax preparers, excluding attorneys, certified public accountants (CPAs) and enrolled agents (EAs), to pass a competency exam and complete 15 hours of federal continuing education each year. Nonexempt tax preparers, includes CRTPs, have until 2013 to pass the test. The continuing education requirement will start January 1, 2012.
CTEC is still planning to conform its federal requirements to the IRS’, but it will take legislative change to the California Tax Preparers Act. The proposed new continuing education hours for CTEC will be 15 hours federal and 5 hours state.
Exam Requirement
IRS testing centers are expected to its open doors nationwide sometime in October 2011. Nonexempt tax preparers have until December 31, 2013 to pass the test. The test can take it as many times as needed.
The exam is estimated to cost between $100-$125 for each time it is taken.
Attorneys, CPAs and EAs are exempt from the new IRS exam requirement. Individuals who work under an attorney, CPA or EA—but do not sign the tax return— will be exempt as well.
Tax preparers who do not prepare 1040s will also be exempt from the exam.
E-File Mandate
Starting January 1, 2012, tax preparers or firms that prepare and then file more than 10 tax returns for individuals, trusts or estates will be required to use IRS e-file to transmit the tax return (some waivers or exemptions may be considered). Tax preparers or firms who do not have an e-file identification number (EFIN) will have to get one to become an authorized IRS e-file provider.
Background Check
Nonexempt tax preparers, including CRTPs, must provide fingerprints for background checks. The IRS is proposing to exempt attorneys, CPAs and EAs from the fingerprint requirement.
The fingerprint checks are expected to start later this year. Nonexempt tax preparers who have a PTIN will have until December 31, 2013 to comply. The IRS estimates the fingerprint fees to be about $60-$90.
For details on the new IRS rules and exemption requirements, visit www.irs.gov/taxpros. If you have a question about CTEC requirements, call (877) 850-2832 or post a comment.
Comments
I am Still waiting for License. I have passed the examination. You CTEC Website must have been virus infected or modified or deleted test scores. Please check with your System Administrator to check his logs for downtime during October - November 2013. I need my license or retake the examinations at no cost to prove a point. Contact me by phone: (562) 225-8050 or email: lloyd.conley@adealseeker.net.
Lloyd- CTEC does not post test scores. The education provider you took the exam from is required to upload your information into the CTEC database before you can register with CTEC. Are you able to log in? If the education is not showing up, call your education provider. If you have more questions, call the CTEC office at 877-850-2832.
I recently got onto a web page, that told me the Ethics exam that was required is no longer required for 2013 for licensed preparers and that the money we spent to take the exam was to be refunded...Anyone know if this is accurate?
No, that is not accurate for CTEC registered tax preparers. You must still complete two hours of ethics each year as part of your continuing education. The website may be referring to the old IRS continuing education requirements that have been suspended due to a lawsuit.
Will the credits I receive for completing the IRS continuing education requirement count towards the CTEC continuing education requirement? thank you
Yes, CTEC has conformed its federal CE requirements to match the IRS requirements; however, keep in mind that in addition to the 15 hours of federal CE, you must also complete 5 hours of state.
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Thank you! We've been blogging about the new IRS requirements even before the actual plan was announced in 2010.