This article needs to be updated. Please update this article to reflect recent events or newly available information.(November 2013)
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.[1]
The Internal Revenue Service (IRS) is the revenue service of the United States federal government. The government agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue, who is appointed to a five-year term by the President of the United States. The IRS is responsible for collecting taxes and administering the Internal Revenue Code, the main body of federal statutory tax law of the United States. The duties of the IRS include providing tax assistance to taxpayers and pursuing and resolving instances of erroneous or fraudulent tax filings. The IRS has also overseen various benefits programs, and enforces portions of the Affordable Care Act.
A Registered Tax Return Preparer is a new category of federal tax return preparers created by the U.S. Internal Revenue Service (IRS).
In January 2013, the Internal Revenue Service announced that it was suspending the requirement to register with the IRS because of a ruling on January 18, 2013, by the United States District Court for the District of Columbia. As a result of a lawsuit, the Court issued an order prohibiting the Internal Revenue Service from enforcing the regulatory requirements for registered tax return preparers.[2] 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.[3]
History of the RTRP Test
An estimated 60 percent of U.S. taxpayers use tax return preparers. The idea of a competency test came from the Return Preparer Review, the product of a series of public hearings with tax preparers, associations and consumer advocates. The review was prompted by the growth in the tax preparation industry, much of it unregulated. There were increasing concerns within the IRS and growing congressional interest in the accuracy of tax return preparation and service to the nation's taxpayers by tax professionals. One U.S. Government Accountability Office report found that of 19 individual tax returns taken to professional tax return preparers, all 19 contained errors and only two reflected the correct refund amount.
After the Return Preparer Review was announced in January 2010, the IRS instituted the Return Preparer Initiative that required all professional tax return preparers to register with the IRS and to obtain a Preparer Tax Identification Number (PTIN). It also required a previously unregulated category of preparers, then known as unenrolled preparers, to pass a one-time competency test, and to take 15 hours of continuing education credits annually. Those who passed the test and a tax compliance check would be given a new credential: Registered Tax Return Preparer. The test was launched in November 2010. Preparers who have PTINs and need to test will have until December 31, 2013 to pass it, but the IRS has urged candidates to take it as soon as possible. Starting January 1, 2014, only Registered Tax Return Preparers, Certified Public Accountants, attorney and Enrolled Agents will be authorized to prepare and sign federal individual tax returns for compensation.[4]
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.
An attorney at law in the United States is a practitioner in a court of law who is legally qualified to prosecute and defend actions in such court on the retainer of clients. Alternative terms include counselor and lawyer. As of April 2011, there were 1,225,452 licensed attorneys in the United States. A 2012 survey conducted by LexisNexis Martindale-Hubbell determined 58 million consumers in the U.S. sought an attorney in the last year and that 76 percent of consumers used the Internet to search for an attorney.
Who was required to take the RTRP Test
Under the rules prior to their suspension in January 2013, the general rule was that any paid tax return preparer who was not a Certified Public Accountant (CPA), attorney or Enrolled Agent was required to take the Registered Tax Return Preparer test. Preparers who do not prepare any Form 1040 series returns were exempt. Also exempt were non-signing preparers supervised by CPAs, attorneys or Enrolled Agents, and who worked at firms 80 percent owned by CPAs, attorneys or Enrolled Agents. The IRS estimates that there are more than 340,000 tax return preparers[5] who must take and pass the test. An IRS YouTube video explained the test. The IRS wanted as many preparers as possible to take the test before the IRS launched a new searchable database allowing prospective clients or potential tax prep employers to search preparers' names and credentials.[4]
Certified Public Accountant (CPA) is the title of qualified accountants in numerous countries in the English-speaking world. 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, almost every state has 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.
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 including audits, collections and appeals.
CPAs, attorneys and Enrolled Agents are already tested during the process of obtaining their credentials, and were exempt from the RTRP testing requirement. CPAs have passed the Uniform Certified Public Accountant Examination, attorneys have passed bar exams, and Enrolled Agents have passed a three-part IRS test called the Special Enrollment Exam (SEE), which covers individual taxation, business taxation and representation issues.
The Uniform Certified Public Accountant Examination is the examination administered to people who wish to become U.S. Certified Public Accountants. The CPA Exam is used by the regulatory bodies of all fifty states plus the District of Columbia, Guam, Puerto Rico, the U.S. Virgin Islands and the Northern Mariana Islands.
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:
RTRP Test details
The Registered Tax Return Preparer Test was a timed, 2.5-hour exam. The test was available only in English. The exam had 120 questions. Tax-related questions were in multiple-choice format. Ethics questions were true and false.[6] The questions were developed by the IRS and the IRS test vendor, Prometric, Inc., based on a job analysis survey sent to 700,000 tax return preparers. The computer-based exam must be taken at one of 260 U.S. test centers operated by Prometric. The test covered preparation of the Form 1040 series and its related schedules. During the test, preparers had electronic access to Publication 17, Tax Guide For Individuals, the Form 1040 and Form 1040 Instructions. Test-takers were prohibited from bringing their own materials into the testing room.
Courses are beginning to form at major universities across the country as accredited educational institutions begin to offer curriculums geared to help tax practitioners meet the new tax return preparer competency examination requirements.[citation needed] Many of the university and association educators who offer tax preparer exam courses also register with the IRS as continuing education providers in order to qualify their courses for continuing education credit. Only IRS approved education providers[7] may offer courses for the required 15 hours of continuing education, which include 2 hours of Ethics, 3 hours of Federal Tax Law Updates, and 10 hours of other Federal Tax Law.
RTRP Test scoring
A perfect score on the test is 500. A score 350 or more is required for passing.[8] Candidates will be told at the test centers whether they passed or failed the test. Only those candidates who fail the test will be given their test scores so they can understand their areas of weakness.
Scheduling the RTRP Test
Candidates for the Registered Tax Return Preparer Test can use their online PTIN accounts at www.irs.gov/ptin to link to Prometric's online scheduling system. They can select from among 260 test locations, a date and time. A $116 non-refundable fee must be paid electronically when scheduling the appointment. The test can be taken at any time of the year except April 1-April 15, an annual black-out period. After scheduling a date, candidates will receive a confirmation email from Prometric. Candidates who are late or absent forfeit their $116 fee.[6]
There are no limits on the number of times candidates can take the test, but the $116 fee applies each time.
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......[9]
Related Research Articles
Form 1040 is one of three IRS tax forms used for personal (individual) federal income tax returns filed with the Internal Revenue Service (IRS) by United States residents for tax purposes.
An accountant is a practitioner of accounting or accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resource(s).
Accountant–client privilege is a confidentiality privilege, or more precisely, a group of privileges, available in American federal and state law. Accountant–client privileges may be classified in two categories: evidentiary privileges and non-evidentiary privileges.
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).
A tax advisor or tax consultant is a person with advanced training and knowledge of tax law. The services of a tax advisor are usually retained in order to minimize taxation while remaining compliant with the law in complicated financial situations. Tax Advisors are also retained to represent clients before tax authorities and tax courts to resolve tax issues.
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. The remainder of this article describes tax preparation by someone other than the taxpayer.
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).
The Minnesota Society of Certified Public Accountants (MNCPA) is a professional association for certified public accountants (CPAs) in Minnesota.
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 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 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 tax preparers will also be listed in The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications, a public information database on the IRS website.
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.
↑ 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 .
↑ 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 .
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.
