IRS to Register and Test Signing Preparers

The IRS on Jan. 4 said it will require registration of paid, signing tax return preparers as well as competency testing and continuing education for preparers other than practitioners (CPAs, attorneys and enrolled agents and others authorized to practice before the IRS). The plan also calls for extending the requirements of Circular 230 beyond practitioners to all paid preparers.

The announcement accompanied the release of a report with findings and recommendations resulting from the IRS’ six-month study of the issue, during which it held public forums for tax professionals, taxpayer advocates and the public.

Preparers will pay a user fee to register and will, if necessary, obtain a preparer tax identification number (PTIN) to use exclusively when signing federal returns. (Currently, preparers may use either a PTIN or a Social Security number, which has hampered efforts to identify them by return.) Preparers will be required to reregister every three years, when they will also be subject to a limited check of their own personal and business tax filing and payment compliance.

Currently, only practitioners are subject to Circular 230 and oversight by the IRS Office of Professional Responsibility. Nonpractitioners are unregulated at the federal level (although a few states require licensing), and complaints against them are handled by the Criminal Investigation or Small Business/Self-Employed divisions or the Treasury Inspector General for Tax Administration. Placing nonpractitioners under Circular 230 will not, however, authorize them to practice before the IRS.

When the new rules will be promulgated and take effect is not yet certain. For more JofA coverage, see “IRS Proposes New Requirements for Return Preparers,” Jan. 5, 2010. For the IRS report, see tinyurl.com/y88xof2.

  IRS Return Preparer Review, December 2009