California Tax Education Council

Why CTEC Stays Despite New IRS Rules

More new IRS rules for tax preparers are set to start in the next few months.

Paid tax preparers who prepare or assist with preparing federal tax returns must renew their IRS Preparer Tax Identification Number (PTIN) before the end of 2011. Starting next year nonexempt tax preparers, including CTEC-registered tax preparers (CRTPs), will also have to complete at least 15 hours of federal continuing education each year, plus pass an exam and background check by 2013.

A big issue that continues to come up is why CTEC is necessary if the IRS plans to enforce its own rules for unlicensed tax preparers. 

It is important to remember that state tax laws are not part of the new IRS plan. By design, the IRS can only focus on federal tax laws. Unless the California State Legislature says otherwise, it still believes unlicensed tax preparers should be bonded and complete courses on state tax laws—Two key issues the IRS plan does not tackle.

Second, the IRS decision to only exempt attorneys, CPAs and EAs, should not be considered an attack on CRTPs. Oregon also enforces requirements for its professional tax preparers that are much stricter than what the IRS is planning.  Just like California, the IRS shows no sign of exempting Oregon tax preparers from its new regulations.

Again, it goes back to the focus of IRS. Keep it all under one “federal” umbrella. No state exemptions.

As for California requirements? There may be some revisions to CTEC rules here and there due to the new federal regulations, but that is about it. At least for now…

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