Registered Tax Return Preparer

Last updated

A Registered Tax Return Preparer is a former category of federal tax return preparers created by the U.S. Internal Revenue Service (IRS).

Contents

In January 2013, the IRS announced the suspension of the program because of a ruling on January 18, 2013, by Judge James E. Boasberg of the United States District Court for the District of Columbia. As a result of a lawsuit, the Court issued an order prohibiting the IRS from enforcing the regulatory requirements for registered tax return preparers. In accordance with this order, tax return preparers covered by this program are not currently required to register with the IRS. The IRS announced that because of the Court's ruling, tax return preparers are not required to complete the competency testing or to secure the continuing education that had been required. [1] [2]

History of Registered Tax Return Preparers

In 2010, the IRS announced that it would increase standards for return preparers and institute testing and continuing education requirements. [3] Prior to the IRS Return Preparer Initiative, anyone could call himself or herself a tax return preparer regardless of age, experience or training. The IRS conducted a series of public hearings with tax preparers, associations and consumer advocates. The result was the Return Preparer Review. The initiative required all tax return preparers to register with the IRS and to obtain a Preparer Tax Identification Number (PTIN). Some preparers were required to pass a competency test and to complete 15 hours of continuing education credits annually. Exempt from the testing and CE requirements were Certified Public Accountants, attorneys and Enrolled Agents, because they already have testing and education requirements for their credentials. Also exempt were non-1040 tax return preparers and non-signing preparers who are supervised by CPAs, attorneys or Enrolled Agents and work at firms 80 percent owned by CPAs, attorneys and Enrolled Agents. Tax preparation volunteers were exempt from all initiative provisions.

Registered Tax Return Preparer requirements

To become a Registered Tax Return Preparer, a person was required to be age 18 or older, to register with the IRS, and to have a valid Preparer Tax Identification Number (PTIN). A Registered Tax Return Preparer was to have passed a competency test covering tax law issues, individual tax return preparation, and ethics. He or she was required to pass a tax compliance check conducted by the IRS. To maintain the designation, a Registered Tax Return Preparer was required to complete 15 hours of continuing education courses each year, and to renew his or her PTIN annually. Finally, the Registered Tax Return Preparer was required to adhere to ethical standards set out by the Department of Treasury's Circular 230. [4]

The first certificates for Registered Tax Return Preparers were issued in March 2012. [5]

Exemptions from the Tax Return Preparer Requirements

For certain professionals such as those already enrolled to practice before the IRS, CPAs, and tax attorneys, the scope of the exemption from the testing and annual continuing education requirements was clear. For others who did not possess a designation, the facts and circumstances determined whether or not the practitioner was required to become a Registered Tax Return Preparer. [6] This exemption did not eliminate the need for all tax return preparers to obtain a PTIN (preparer tax identification number).

To qualify as a non-Form 1040 series preparer, a tax return preparer could not receive compensation for the preparation or assistance with, any Form 1040 series tax return or claim for refund, except a Form 1040-PR or Form 1040-SS. A non-Form 1040 series tax return preparer was allowed to sign any other tax return he or she prepared. A non-1040 series preparer was required to obtain a PTIN (preparer tax identification number) from the IRS, and to certify annually upon renewal that he or she did not prepare Form 1040 series tax returns.

An important characteristic of a supervised preparer was that the individual could not sign, or be required to sign, tax returns as a paid return preparer. At least 80 percent of the firm that employs the supervised preparer was required to be owned by attorneys, CPAs, or enrolled agents. A supervised preparer was required to be supervised by an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who signs the returns prepared by the supervised preparer.

Non-Form 1040 Series Preparers and Supervised Preparers were exempt from IRS competency testing and continuing education requirements. Non-1040 series preparers and supervised preparers were not allowed to identify themselves as a Registered Tax Return Preparer or as a Circular 230 practitioner.

Registered Tax Return Preparer Test

Prior the program's suspension, the Registered Tax Return Preparer Test was used as a minimum competency exam intended for return preparers to demonstrate basic proficiency in U.S. tax law, tax return preparation and ethics. It was a 120-question exam timed at 2.5 hours. Preparers who were required to pass the test had until December 31, 2013. [7]

Continuing Education

Prior to the suspension of the program in January 2013, Registered Tax Return Preparers and RTRP candidates were required to complete 15 hours of continuing education annually. They were required to have 10 hours of general federal tax law, 3 hours of tax law updates and 2 hours of ethics. These continuing education courses were required to be taken from IRS-approved continuing education providers. Preparers who had a RTRP test requirement also had a continuing education requirement, even if they had not yet taken the test. [8]

Ethics and Tax Compliance

Under the program, ethical requirements that previously applied only to CPAs, attorneys and Enrolled Agents also applied to all paid return preparers. All tax professionals also were to undergo a tax compliance check and were subject to the standards for practice outlined in Treasury Department Circular 230. [9]

Services provided

Registered Tax Return Preparers were allowed to prepare and sign federal tax returns for individuals. They had limited authority to represent taxpayers before the Internal Revenue Service. RTRPs were allowed to represent clients before revenue agents, customer service representatives, or similar officers and employees of the IRS (including the Taxpayer Advocate Service) during an audit if they signed the tax return or claim for refund for the tax period under examination. [10]

By comparison, CPAs, attorneys and Enrolled Agents have unlimited representation rights before the IRS. They may represent taxpayers at any stage of an audit, collection or appeals process.

Suspension of the program

In January 2013, the IRS issued the following announcement:

As of Friday, Jan. 18, 2013, the United States District Court for the District of Columbia has enjoined the Internal Revenue Service from enforcing the regulatory requirements for registered tax return preparers. In accordance with this order, tax return preparers covered by this program are not currently required to register with the IRS, to complete competency testing or secure continuing education. The ruling does not affect the regulatory practice requirements for CPAs, attorneys, enrolled agents, enrolled retirement plan agents or enrolled actuaries.
The Internal Revenue Service, working with the Department of Justice, continues to have confidence in the scope of its authority to administer this program. On Wednesday, Jan. 24, the IRS and Justice Department asked for the injunction to be lifted. Regardless of the outcome of that request, an appeal is planned within the next 30 days.
The IRS is continuing to evaluate the scope of the court's order in determining consistent next steps...... [11]

See also

Annual Filing Season Program

Related Research Articles

Form 1040 IRS tax record

Form 1040 is an IRS tax form used for personal federal income tax returns filed by United States residents. The form calculates the total taxable income of the taxpayer and determines how much is to be paid or refunded by the government.

<span class="mw-page-title-main">Certified Public Accountant</span> Title of qualified accountants in many countries

Certified Public Accountant (CPA) is the title of qualified accountants in numerous countries in the English-speaking world. It is generally equivalent to the title of chartered accountant in other English-speaking countries. In the United States, the CPA is a license to provide accounting services to the public. It is awarded by each of the 50 states for practice in that state. Additionally, all states except Hawaii have passed mobility laws to allow CPAs from other states to practice in their state. State licensing requirements vary, but the minimum standard requirements include passing the Uniform Certified Public Accountant Examination, 150 semester units of college education, and one year of accounting-related experience.

In the United States of America, an Enrolled Agent is a tax advisor, who is a federally authorized tax practitioner empowered by the U.S. Department of the Treasury. Enrolled Agents represent taxpayers before the Internal Revenue Service (IRS) for tax issues that include audits, collections and appeals.

A Taxpayer Identification Number (TIN) is an identifying number used for tax purposes in the United States and in other countries under the Common Reporting Standard. In the United States it is also known as a Tax Identification Number or Federal Taxpayer Identification Number. A TIN may be assigned by the Social Security Administration or by the Internal Revenue Service (IRS).

Tax preparation is the process of preparing tax returns, often income tax returns, often for a person other than the taxpayer, and generally for compensation. Tax preparation may be done by the taxpayer with or without the help of tax preparation software and online services. Tax preparation may also be done by a licensed professional such as an attorney, certified public accountant or enrolled agent, or by an unlicensed tax preparation business. Because United States income tax laws are considered to be complicated, many taxpayers seek outside assistance with taxes.

A 501(c)(3) organization is a United States corporation, trust, unincorporated association or other type of organization exempt from federal income tax under section 501(c)(3) of Title 26 of the United States Code. It is one of the 29 types of 501(c) nonprofit organizations in the US.

Internal Revenue Service (IRS) tax forms are forms used for taxpayers and tax-exempt organizations to report financial information to the Internal Revenue Service of the United States. They are used to report income, calculate taxes to be paid to the federal government, and disclose other information as required by the Internal Revenue Code (IRC). There are over 800 various forms and schedules. Other tax forms in the United States are filed with state and local governments.

Circular 230 refers to Treasury Department Circular No. 230. This publication establishes the rules governing those who practice before the U.S. Internal Revenue Service (IRS), including attorneys, certified public accountants (CPAs) and enrolled agents (EAs).

Form 990 United States Internal Revenue Service form

Form 990 is a United States Internal Revenue Service form that provides the public with financial information about a nonprofit organization. It is often the only source of such information. It is also used by government agencies to prevent organizations from abusing their tax-exempt status. Certain nonprofits have more comprehensive reporting requirements, such as hospitals and other health care organizations.

The Special Enrollment Examination is a test that individuals can take to become an Enrolled Agent in the United States. The Enrolled Agent credential is conferred and regulated by the Internal Revenue Service (IRS). The exam consists of three parts:

<span class="mw-page-title-main">Internal Revenue Service</span> Revenue service of the United States federal government

The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting taxes and administering the Internal Revenue Code, the main body of the federal statutory tax law. It is part of the Department of the Treasury and led by the Commissioner of Internal Revenue, who is appointed to a five-year term by the President of the United States. The duties of the IRS include providing tax assistance to taxpayers; pursuing and resolving instances of erroneous or fraudulent tax filings; and overseeing various benefits programs, including the Affordable Care Act.

Tax protesters in the United States advance a number of administrative arguments asserting that the assessment and collection of the federal income tax violates regulations enacted by responsible agencies –primarily the Internal Revenue Service (IRS)– tasked with carrying out the statutes enacted by the United States Congress and signed into law by the President. Such arguments generally include claims that the administrative agency fails to create a duty to pay taxes, or that its operation conflicts with some other law, or that the agency is not authorized by statute to assess or collect income taxes, to seize assets to satisfy tax claims, or to penalize persons who fail to file a return or pay the tax.

The IRS Return Preparer Initiative was an effort by the Internal Revenue Service (IRS) to regulate the tax return preparation industry in the United States. The purpose of the initiative is to improve taxpayer compliance and service by setting professional standards for and providing support to the tax preparation industry. Starting January 1, 2011 and, until the program was suspended in January 2013, the initiative required all paid federal tax return preparers to register with the IRS and to obtain an identification number, called a Preparer Tax Identification Number (PTIN). The multi-year phase-in effort called for certain paid tax return preparers to pass a competency test and to take annual continuing education courses. The ethics provisions found in Treasury Department's Circular 230 were extended to all paid tax return preparers. Preparers who have their PTINs, pass the test and complete education credits were to have a new designation: Registered Tax Return Preparer.

The Preparer Tax Identification Number (PTIN) is an identification number that all paid tax return preparers must use on U.S. federal tax returns or claims for refund submitted to the Internal Revenue Service (IRS). Anyone who, for compensation, prepares all or substantially all of any federal tax return or claim for refund must obtain a PTIN issued by the IRS.

The National Society of Public Accountants (NSPA), later shortened to National Society of Accountants (NSA), is a professional association for tax and accounting professionals; NSA and its state affiliates represent more than 30,000 independent practitioners who provide accounting, tax, auditing, financial and estate planning, and management services to 19 million individuals and businesses. NSA's mission is to provide national leadership in the profession of accountancy and taxation through the advocacy of practice rights, and by the establishment and promotion of high standards in ethics, education, and professional excellence.

Tax audit representation, also called audit defense, is a service in which a tax or legal professional stands in on behalf of a taxpayer during an Internal Revenue Service (IRS) or state income tax audit.

The Registered Tax Return Preparer Test was a test produced by the U.S. Internal Revenue Service (IRS). Until the program was suspended in January 2013, the IRS had implemented rules requiring that certain individuals who wanted to work as tax return preparers pass this test to demonstrate their ability to understand U.S. tax law, tax form preparation and ethical requirements. The competency test was part of an agency effort to better regulate the tax return preparation industry, to improve the accuracy of tax return preparation and to improve service to taxpayers. Candidates who passed the test, a tax compliance check, and met certain other requirements had a new designation: Registered Tax Return Preparer.

The Annual Filing Season Program is a voluntary Internal Revenue Service (IRS) program designed to incentivize non-credentialed tax return preparers to participate in continuing education (CE) courses. Participants receive an Annual Filing Season Program - Record of Completion, which may be displayed to prospective clients as a way to stand out in the marketplace and to demonstrate tax knowledge and filing competency. AFSP participants can also opt to be listed in The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications, a public information database on the IRS website.

The premium tax credit (PTC) is a refundable tax credit in the United States. It is payable by the Internal Revenue Service (IRS) to eligible households that have obtained healthcare insurance by a healthcare exchange (marketplace) in the tax year. It can be paid in advance directly to a healthcare insurance company to offset the cost of monthly health insurance premiums.

<span class="mw-page-title-main">Office of Professional Responsibility (IRS)</span>

The Office of Professional Responsibility (OPR) at the U.S. Internal Revenue Service (IRS) is responsible for all matters related to "tax practitioner" misconduct, discipline and practice before the IRS under 31 CFR Subtitle A, Part 10. A tax practitioner, sometimes referred to as a tax professional, is generally an attorney, CPA or enrolled agent.

References

  1. ↑ IRS Announcement, Jan. 22, 2013, at . Also, see generally Patrick Temple-West & Kim Dixon, "IRS rescinds tax preparer rules after court ruling," Jan. 22, 2013, Thomson-Reuters News, at ; and Richard Rubin, "Tax Preparer Rules Vanish on Filing Eve After Court Loss," Jan. 23, 2013, Bloomberg News, at .
  2. ↑ See, generally, Memorandum Opinion, Jan. 18, 2013, docket entry 22, Sabina Loving v. Internal Revenue Serv., case no. 1:12-cv-00385-JEB, U.S. District Court for the District of Columbia, at .
  3. ↑ https://www.irs.gov/newsroom/article/0,,id=217781,00.html RS Proposes New Registration, Testing and Continuing Education Requirements
  4. ↑ https://www.irs.gov/taxpros/article/0,,id=254929,00.html Become a Registered Tax Return Preparer
  5. ↑ https://www.irs.gov/newsroom/article/0,,id=255400,00.html%5B%5D IRS Sends Test Results; First Registered Tax Return Preparer Certificates
  6. ↑ http://fastforwardacademy.com/index-page-irs-paid-return-preparer-changes.htm Exempt Classes of Preparers
  7. ↑ https://www.irs.gov/pub/irs-utl/rtrpcandidateinfobulletin.pdf Candidate Information Bulletin
  8. ↑ https://www.irs.gov/taxpros/article/0,,id=255485,00.html FAQs: Registered Tax Return Preparer Continuing Education Requirements
  9. ↑ https://www.irs.gov/newsroom/article/0,,id=257999,00.html IRS Marks Third Anniversary of Return Preparer Review
  10. ↑ https://www.irs.gov/taxpros/article/0,,id=239685,00.html Frequently Asked Questions: Preparer Credentials
  11. ↑ IRS Statement on Court Ruling Related to Return Preparers, Jan. 2013, Internal Revenue Service, U.S. Dep't of the Treasury, at .
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.