As part of the new IRS regulations for tax preparers, all who prepare taxes for remuneration must undergo a competency test and be officially registered as tax preparers. New tax preparers will receive their Preparer Tax Identification Number (PTIN). This new regulation is part of a suite of regulations aimed at bringing greater professionalism into the tax preparation industry and addressing the problem of tax fraud.
Recently, the initial batch of tax preparers who sat for their competency tests has been given their results. Those who obtained a score of at least 350 out of a possible 500 in the 120 question test will pass. The test focuses specifically on forms 1040 and also includes questions about wages, small business income and nonbusiness income.
Upon passing the competency test, a tax compliance check is carried out on the potential tax preparer. Clearing this check will qualify the candidate as a Registered Tax Return Preparer.
As of now, the test results are sent to the candidates through the mail. But after April 16, the candidates can receive their results at the testing site itself just after sitting for their competency test. Anyone who wants to become a Registered Tax Return Preparer must sit for the competency test within 2 years. An annual fee is also charged to maintain one’s license to practice as a Registered Tax Return Preparer.
Tax attorneys, Certified Public Accountants and enrolled agents are also required to register for their PTINs but they are exempted from having to sit for the competency test. This is because these professionals already have their own professional organizations that regulate their competence in tax matters. Also exempted from the test are those who do not prepare the federal form 1040 series and those who prepare tax returns under supervision of tax attorneys, CPAs and enrolled agents but do not sign as the preparer.
If you are interested in becoming a tax preparer, you can sit for the test by registering at www.irs.gov/ptin. The fee to sit for the test is $116. In addition, after qualifying as a Registered Tax Return Preparer, you need to pay the annual fee.