How Do I Become a Registered Tax Return Preparer?

The IRS has released guidance for a new category of tax professionals called Registered Tax Return Preparers. Annual return preparation and electronic filing is a growing industry, and many taxpayers are choosing the option of a third party tax preparer.

If you are interested in becoming a Registered Preparer, here is a checklist of sorts of what you will need to know.

1. You will need a Preparer Tax Identification Number (PTIN)

As of January 2011, the IRS started requiring all tax preparers to obtain a PTIN. A PTIN is required for any individual who prepares tax returns for compensation. The PTIN is a number that identifies who you are, and there is a fee of $64.25 to obtain one.

When registering for a PTIN, you will need to provide the IRS with some background information concerning any credentials you hold, information about your most recent tax return, and personal information about yourself.

You can use the IRS Online PTIN Application process to get started.

2. A tax compliance and background check will be done

Before the IRS will recognize you as a competent tax preparer and entrust you with the responsibility to assist other taxpayers, you must be current with all of your own personal tax compliance responsibilities. This means that you must be up to date with the filing and paying of all personal and business taxes.

The IRS will also perform a standard background check. You will also be fingerprinted as part of this process.

3. You must pass a competency test

The test is designed to provide oversight and consistency in the tax preparer and tax law field. According to the IRS, the test will have approximately 120 questions formatted in a combination of multiple choice and true or false. Questions are weighted and individuals will receive a pass or fail score, with diagnostic feedback provided to those who fail.

For a list of the Publications that the IRS recommends studying up on and to find out the content of what will be on the test, see the September IRS Press Release that discussed these new requirements.

There is a fee to take the test; this is expected to be around $100. For those who fail the test, you can retake it after you pay the fee again.

4. There are continuing education requirements

Tax law is subject to frequent procedure and policy changes, and it is critical that tax preparers keep in step with these adjustments. With that in mind, Registered Tax Return Preparers will need to complete 15 hours annually of additional education. This process will begin in 2012.

Attorneys, CPAs and Enrolled Agents are exempt from the testing and continuing education requirements, since they are already subject to stringent testing and professional education based on their credentials.

Those who are recognized as Registered Tax Return Preparers are entitled to prepare and sign all tax returns. They also have the right to represent a taxpayer before the IRS with regards to the tax return they prepared and signed.

This representation is limited to matters dealing with the tax return itself, such as math errors, examination issues and unreported income. They are unable to represent a taxpayer in a collection or tax court matter.

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