Higher Standards for Preparers.... 2011 Update!

In 2010, the IRS launched an initiative to increase oversight of the tax preparation industry and introduced regulations for those who are paid to prepare tax returns.  Since then, 708,000 preparers have registered to either renew or obtain their PTIN (Preparer Tax Identification Number).  When the plan was announced in 2009, I wrote a post  explaining the higher standards for preparers and then updated it last year when new information was released.  This year, we are much closer to working within a system that holds all paid preparers accountable for the work they are doing for their customers.  All paid preparers are required to register and renew their PTIN annually which means that all current PTINs will expire on 12/31/11 and can be renewed at a cost of $64.25.  These fees are in place to cover the costs associated with the new system.  The application for renewal and registration will be made available on October 16th.  Like last year, all preparers will register by using the IRS online registration system.  

All preparers who are not CPAs, Attorneys or Enrolled Agents will continue to receive "Provisional PTINs".  Once a competency exam and background check are successfully completed, these preparers will be placed into "Active" status.  Just in case you're wondering.... you did read that correctly.  Until now, the IRS has not tested or background-checked people who are paid to prepare returns!  As I've mentioned in previous posts, this is great news for the tax preparation industry.  Just knowing that preparers are becoming more accountable for the work they are doing should have taxpayers feeling more confident that their returns are being completed accurately and by someone required to adhere to a standard code of ethics.  The IRS plans to announce details around the testing locations and availability in the coming months.  Once announced, preparers will have until 12/31/13 to pass the exam which will cover the Form 1040 series and related schedules.  Until then, it's important to note that some national tax preparation companies have already recognized the need for accreditation prior to this IRS initiative. For example, Liberty Tax Service has tested tax preparer competency with an online test since 2006.

To find a certified preparer in your area, contact your local income tax preparation office.

Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog.  Please use your discretion before making any decisions based on the information provided.  This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs. 

Posted To: Tax Mommy's Blog By: Stephanie Brenneman On: Tuesday, August 30, 2011
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