By Ken Berry
As time ticks down in 2012, the IRS is once again reminding professional tax return preparers to renew their Preparer Tax Identification Numbers (PTINs) if they intend to offer their services in 2013 (IR-2012-103, 12/20/12). Current PTINs will expire when the ball drops in New York City's Times Square celebration on December 31.
The IRS is also warning preparers who must meet new competency testing and continuing education (CE) requirements that they only have one more year – until midnight on December 31, 2013 – to fulfill their obligations. Thus far, only 48,000 tax return preparers have earned certificates out of the estimated 350,000 professionals who will have to do so.
Details: As part of ongoing IRS efforts to enhance the profession and improve services to taxpayers, anyone who prepares, or helps someone else prepare all or substantially all of a federal tax return, a claim for a refund or some other federal form for compensation must have a valid PTIN. Tax professionals can obtain or renew their PTINs on the IRS website. The fee is $63 ($64.25 for first-timers).
If you fail to renew your PTIN, you may be liable for penalties, injunction, referral for criminal investigation, or disciplinary action by the IRS Office of Professional Responsibility. To make matters even worse, you won't be permitted to file returns on behalf of your clients.
The new testing requirements apply to tax return preparers who aren't enrolled agents (EAs), certified public accountants (CPAs) or attorneys. These preparers who need to take a competency test are encouraged to schedule an appointment while they are renewing their PTIN. The registered tax return preparer (RTRP) test may be scheduled up to six months in advance, depending on the location. Select "next steps and additional requirements" on your online PTIN account to schedule the test.
Another other option available to those required to take the competency test is the Special Enrollment Exam. This is a three-part test enabling a practitioner to become an EA, the highest credential the IRS awards. More information is available on the IRS website.
All preparers are encouraged to enter their information accurately so the IRS can properly determine testing requirements. CPAs, EAs, and attorneys should provide information about their credentials. Preparers who don't prepare any Form 1040 series returns, or those who are supervised in certain firms, must self-certify that they're exempt from the testing requirement. A "supervised preparer" is someone who is:
- Employed by a law or accounting firm where at least 80 percent of the firm is owned by CPAs, EAs, or attorneys, and
- Supervised by one of those professionals who reviews and signs the returns they prepare.
Last call: Registered practitioners and RTRP candidates also must self-certify that they've completed or will complete the required fifteen hours of CE courses. Beginning January 1, 2014, only registered tax return preparers, CPAs, EAs, and attorneys will be authorized to prepare and sign federal individual tax returns.