Do You Know if Your Tax Preparer is a Registered Tax Return Preparer?

Did you know the IRS had new standards for paid tax preparers?  They in fact are celebrating the fourth anniversary of its groundbreaking return preparer initiative.  And 2014 is the launch of the final step in the process. 

The IRS wanted to ensure that standards for competency, continuing education and ethics would apply to all paid tax return preparers and also try to enhance tax compliance and service to taxpayers.

It is important that you are aware that beginning in 2014, only Registered Tax Return Preparers, Enrolled Agents, Certified Public Accountants, and attorneys will be authorized to prepare individual income tax returns for compensation.

Highlights of Requirements:

Mandatory registration and use of a Preparer Tax Identification Number (PTIN):

Anyone who is paid to prepare, or help prepare, all or substantially all of a federal tax return now has to register with the IRS and obtain a PTIN, as do all enrolled agents. The PTIN is valid for a calendar year and must be renewed annually. 

Competency Test: In November 2011, a 120-question basic competency test was launched. Those preparers who are not already qualified are required to take the test by Dec. 31, 2013, to stay in business. 

Certified Public Accountants, Enrolled Agents and attorneys are exempt from the test because they already have other testing requirements as part of their credentials. 

Continuing Education (CE): The roughly 340,000 preparers who have a testing requirement also have a new requirement to complete 15 hours of continuing education courses each year. The CE credits must include 10 hours in federal tax law, three hours in federal tax law changes and two hours in ethics. This requirement became effective January 2012 and it applies even if the preparer has not yet taken the test. 

Ethics and Tax Compliance: Ethical requirements that previously applied only to CPAs, EAs and attorneys now apply to all paid return preparers. All paid preparers also will undergo a tax compliance check and are subject to the standards for practice outlined by the Treasury Department.

Registered Tax Return Preparer: Preparers who pass the competency test and tax compliance check are given a new credential: Registered Tax Return Preparer. 

Public Database: The IRS also will create a publicly searchable database that will allow taxpayers to see if their tax preparers have met IRS standards or to find a tax preparer in their zip code area. The database will also show any credentials held by the preparer, including the new RTRP credential, as well as those who are EAs, CPAs and attorneys.

There are certain things you can do to save time and money on your tax preparation bill:

1. Give your accountant everything they need.
2. If your accountant calls with questions, call them back in a timely fashion.
3. Have bookkeeper look over your QuickBooks account before sending it to your accountant. They can help correct items that your accountant will want changed and save you money.
4. If you want your return done early, get it to them by February 15^th. They won’t be as busy.