Update on New Rules for Federal

Tax Return Preparers

Sr. Stakeholder Liaison

Sharon D. Sanders

Background: An Overview

• January 2010 – IRS released Return Preparer Review, the product of a six-month study and numerous public hearings

The goal: • Enhance oversight to improve the tax preparation profession, improve tax compliance and improve service to taxpayers

Phases of New Rules for Preparers

Phase 1

PTIN

Registration

Phase 2

Competency Test

Phase 3

Continuing Ed

Requirements

Phase 4

Compliance &

Enforcement

� Must register annually

� Must renew PTIN

� PTIN valid calendar year

� Since 01/01/11, must use PTIN on return; not SSN.

� IRS urging preparers to test now (RTRP or EA)

� Schedule using PTIN Account

� Topics: tax law and Form 1040 prep

� New starting 2012 for RTRPs and RTRP candidates

� 15-hours for RTRP candidates annually

� CE hours from authorized providers only

� Tax Compliance Check for all

� Compliance letters and visits

� Identifying those not in compliance

� 2014: Only certain authorized preparers can do 1040 prep.

1 2 3 4

Overview of Return Preparer Requirements

Category PTIN

Tax

Compliance

Check

IRS TestContinuing

Education

Practice

Rights

Enrolled Agents Yes YesYes

(SEE)72 hrs / 3 yrs Unlimited

Registered Tax Return Preparers

Yes YesYes

(RTRP)15 hrs yr Limited

CPAs Yes Yes No Varies Unlimited

Attorneys Yes Yes No Varies Unlimited

Supervised Preparers

Yes Yes No No Limited

Non-1040 Preparers

Yes Yes No No Limited

Governance: IRS Return Preparer Office

Carol Campbell, Director

• Office responsible for:

–Registration

–PTIN System

–Testing

–Continuing Education

–Background and tax compliance checks

–Compliance

IRS Office of Professional Responsibility

Karen Hawkins, Director

• Office responsible for:

–Adherence to ethical conduct and professional standards

• New credential for the 340,000 tax return preparers who are not CPAs, Enrolled Agents, attorneys, supervised preparers or non-1040 preparers

• Title cannot be used by preparers until the RTRP certificate is received

• Certificates are issued approximately 4 to 5 weeks after preparers have passed the test

Registered Tax Return Preparer

Registered Tax Return Preparers

• Definition: Passed the RTRP competency test and tax compliance check and is active and in good standing with the IRS Return Preparer Office

• Must register and annually renew PTIN

• Must complete 15 hours of continuing education credits annually

Who Must Do What?

Supervised Preparer

• Definition: Non-signing preparer supervised by CPA, attorney or EA, working at a firm 80% owned by CPAs, attorneys or EAs.

• Must register and annually renew PTIN

• Must have supervisor’s PTIN for PTIN registration/renewal

• Must pass tax compliance check

Who Must Do What?

Non-1040 Preparers

• Definition: Does not prepare even one Form 1040 series tax return

• Must register and annually renew PTIN

• Must pass tax compliance check

Who Must Do What?

Anyone who, for compensation,

prepares or helps prepare all or

substantially all of a federal tax return or

claim for refund must have a Preparer Tax

Identification Number (PTIN).

Additionally, all Enrolled Agents must have a

PTIN.

The Basics: Who Needs a PTIN?

The Basics: The PTIN

• All PTINs expire on December 31 and must be renewed annually

• Renewal period opens mid-October

• First-time fee: $64.25; Renewal fee: $63

• Go to www.irs.gov/ptin to register and renew

• TIP: Do NOT wait until Dec. 31!

The Basics: The PTIN

TIP: You will always need your user ID and password to access your online PTIN Account.

• Forgot your log-in info? Click on the appropriate link on the log-in page for assistance:

–Forgot User ID?

–Forgot password?

–Forgot or Cannot Access Email?

RTRP Continuing Education

• Annual requirement beginning in 2012 for Registered Tax Return Preparers and RTRP Candidates

–3 hours of federal tax law updates

–2 hours of ethics

–10 hours of other federal tax law

• Obtain from IRS-approved providers

• Info available at www.IRS.gov/taxpros/ce

Preparer e-File Mandate

• Paid preparers (or firms) preparing and filing 11 or more individual or trust returns are required to e-file

• Firms must compute number of anticipated returns in the aggregate. All members must e-file if firm meets threshold

• No EFIN? Sign up at IRS e-services. It’s free.

• Process can take 45 days

• Client chooses to paper file• E-filed return rejected by IRS e-file and

reject condition unresolved

Exceptions (Client Return)

• Explain new law and benefits of e-file

• Obtain a signed statement

• Attach Form 8948 to return

Preparer Responsibilities When Client Prefers Paper

• Receives hardship waiver• Is a member of recognized religious group

conscientiously opposed to electronic filing• Has software package that does not support form

or schedule attached to return• Ineligible to e-file because preparer is foreign

preparer living and working abroad and does not have SSN, or

• Ineligible to e-file due to IRS sanction

Exceptions (Preparer)

• Form 8944, Preparer e-file Hardship Waiver Request

• Form 8948, Preparer Explanation for Not Filing Electronically

Related e-File Mandate Forms

• Test specifications & study materials are at www.IRS.gov/taxpros/tests

– One level, Form 1040 series only

– One time requirement, not annual

• Schedule at 263 Prometric testing centers

• $116 fee

• Deadline is 12/31/13

• We are still working on guidance for foreign preparer testing

RTRP Competency Test

Test Now – Don’t Delay!

• Avoid the last-minute rush

• The test covers 2011 tax law – take it while the law is still fresh

• A public database of authorized preparers is coming soon – become an RTRP or EA before it launches

• Increase your credibility by obtaining your RTRP (or EA) credential

Recap of Key Items

• IRS urges preparers to test now to guarantee a seat at a test site

• New public database will launch next year• Starting Jan. 1, 2014, only CPAs, EAs,

RTRPs and attorneys will be authorized to prepare and sign individual returns for compensation

• IRS will launch a public awareness campaign about the new requirements in 2014

For additional information or assistance

• PTIN assistance – 877-613-7846

–Hours of operation: Mon - Fri8 a.m. – 5 p.m. (CST)

• RTRP test assistance – 855-477-3926

–Hours of operation: Mon – Fri

8 a.m. – 8 p.m. (EST)

• CE provider assistance – 855-296-3150

–Hours of operation: Mon – Fri

8 a.m. – 8 p.m. (EST)

For additional information or assistance

• IRS.gov/ptin

• IRS.gov/taxpros/tests

• IRS.gov/taxpros/ce

• Facebook.com/irstaxpros

• Twitter.com/irstaxpros

• LinkedIn.com/company/irstaxpros

• YouTube.com/irsvideos (irstaxprosplaylist)