Registered Tax Return Preparers

When will you see a tax preparer acclaiming the designation of Registered Tax Return Preparer (RTRP)?



Most likely, it won't be any time soon. The IRS just issued Notice 2011-45 that outlines the restrictions on usage of the term. They have also issued TD 9527 which contains the final regulations governing practice before the IRS. Before a preparer can be considered a RTRP, the applicant must pass a competency exam and survive a tax compliance and suitability check. This process will also include the applicant submitting fingerprints.



When can tax preparers take the exam? The best estimate now is October '" it could be later, but let's be optimistic. The IRS has appointed a vendor to administer the exam, but presently it's not available. The suitability check is likewise in the development process.

What this simply means is there isn't any way any individual can become a RTRP now. No exam, no tax compliance check, and no suitability check = no RTRPs.



Your paid tax preparer should already have a valid Preparer Tax Identification Number (PTIN). That number was required by the IRS for all paid tax preparers during the 2010 tax year.



Having a PTIN does not permit the preparer to represent that he is a RTRP or to intimate he has passed the competency exam. When the competency exam becomes available, the preparer must pass the exam, and complete the tax compliance and suitability checks to be eligible to secure the designation of RTRP.



All RTRPs will be subject to Circular 230 '" the same rules under which CPAs, attorneys and enrolled agents operate. Section 10.30 of these rules are being amended to require a preparer using paid advertising to represent him/herself as a RTRP must include this statement: "The IRS does not endorse any particular individual tax return preparer. For more information on tax return preparers go to irs.gov.'



What do these changes actually mean to you, the taxpayer?



Every preparer who has a PTIN now or has one prior to the RTRP exam being available can coast on that PTIN until December 31, 2013. Those preparers not having a PTIN prior to the exam being available must first pass the exam and clear the other checks before a PTIN can be received. No RTRP = no PTIN.



Basically, your paid preparer, PTIN already in hand, can prepare returns through December 31, 2013. After that date, all paid preparers must have passed the tax exam and IRS checks to earn the RTRP designation which then permits them to secure a valid PTIN.



If your return is presently being prepared by an enrolled preparer '" CPA, attorney or enrolled agent '" you will likely notice no changes. If the paid preparer you are presently using is not enrolled now and chooses to not meet the pending IRS requirements, you will need to start your search for a new preparer for returns due after December 31, 2013.