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September 4, 2012


IRS Ramps Up Regulation of Paid Tax Preparers

Given the complexity of so many tax laws, paid tax preparers are vital to many people and businesses. Recognizing this, the IRS has been pushing for the past three years to initiate a competency testing program for preparers.

The agency naturally hopes that orderly regulation of preparers will make the tax collection system run more smoothly, with less need for tax litigation.

Many of the basic elements of the preparer regulation program are now in place. They include:

• Mandatory registration of all paid preparers

• A competency test, to be taken by December 31, 2013

• Continuing education for about 340,000 tax preparers

• Broadening the applicability of ethics standards to include all preparers

To be sure, these basic elements have numerous nuances. For example, the ethics standards already applied to certified public accounts (CPAs), attorneys and enrolled agents (EAs). The preparer review program will now extend this to all preparers.

In return for complying with the program requirements, however, preparers will be granted a new credential. The formal name of this added credential will be “registered tax return preparer.” As of June of this year, over 4,800 people had already been granted this status.

Once the preparer review program takes full effect in 2014, only four groups of representatives will have IRS authorization to prepare individual tax returns for profit. Those groups will be:

•· Registered tax return preparers

• Enrolled agents

• Certified public accountants

• Attorneys

The IRS will create a searchable database of providers who have met the new standards. The transparency is supposed to empower taxpayers to choose appropriate preparers.

Source: “IRS Marks Third Anniversary of Return Preparer Review,”