Everyone who prepares a tax return for a fee will eventually need to register by the Internal Revenue Service. Tax attorneys, certified public accountants, and enrolled agents are already registered with the IRS and are subject to testing and continuing education requirements. The IRS will require than other tax preparers also register, pass a competency test, and meet continuing education requirements. The agency plans to start implementing this plan in 2011. In their news release, the IRS outlines the basic requirements:
- "Requiring all paid tax return preparers who must sign a federal tax return to register with the IRS and obtain a preparer tax identification number (PTIN). These preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid.
- "Requiring competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.
- "Requiring ongoing continuing professional education for all paid tax return preparers except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.
- "Extending the ethical rules found in Treasury Department Circular 230 -- which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS -- to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct."
The ethical conduct rules I find to be the most interesting of all the requirements. Attorneys, CPAs, and enrolled agents already are subject to rules regarding ethical behavior including, among other things, not charging a fee based on a percentage of a refund and following strict rules regarding how client data is protected and utilized.
In their more in-depth 55-page report, the IRS outlines that tax return preparers will need to have at least 15 hours of continuing professional education in tax-related topics, and that the agency plans to develop three tests covering basic Form 1040 topics, more advanced 1040 topics, and topics related to business tax returns. By contrast, enrolled agents are required to complete roughly 24 hours of continuing education per year (72 hours total in a 3-year cycle); attorneys and CPAs complete continuing education as mandated by their state bar or board of accountancy.
What other tax bloggers are saying:
- "Yes, I know we're treating a symptom here -- incompetent and/or criminal tax preparers -- rather than the real illness -- a tax code and its implementation that is so complicated that most of us need outside help to meet our tax-filing obligations." Don't Mess With Taxes
- "I am disappointed that - (1) attorneys and CPAs who prepare 1040s are not required to take a competency test or to satisfy the mandatory continuing education in taxation requirements, and (2) there is no mention of a 'grandfathering' exemption from the required competency test for non-initialed preparers." Wandering Tax Pro