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December 27, 2012


IRS steps up regulation of professional tax preparers

Given the complexity of the federal tax code, professional tax preparers and other advisers play a very important role for many taxpayers. Many taxpayers rely on these preparers in order to file tax returns t hat are accurate and on time.

The IRS is well aware of this and has been overseeing a process to regulate professional preparers more closely. The regulations concern competency tests, continuing education and other related requirements.

The IRS has been rolling out this new framework in stages. Nearly two years ago, it began to require all paid preparers to obtain a Preparer Tax Identification Number (PTIN) before being allowed to handle returns for others.

Once obtained, a PTIN does not last forever. It must be renewed periodically, as the IRS recently reminded tax preparers. And it’s not only the PTIN that is involved anymore, either, as the IRS is also introducing competency tests and continuing education requirements.

Because there are different types of professional tax preparers, the competency tests are not one-size-fits-all. One test is for registered tax return preparers (RTRP). Another is for enrolled agents (EA), the highest certification issued by the IRS.

Of course, someone has to pay for such requirements. The fees involved can add up, as fees in any professional field tend to do.

Some critics are concerned about those fees. They believe that that the IRS is regulating mom-and-pop tax preparers out of business. Attempts to delay or stop the regulations, however, have not been successful.

In short, the stepped-up regulation of professional tax return preparers is going forward, despite critics’ objections.

Source: “The IRS Regulates Mom-and-Pop Tax Preparers Out of Business, Just in Time for Tax Season!,” Reason, Katherine Mangu-Ward, 12-27-12
Additional source: “Return Preparer Regulations – Overview,”

Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our page on IRS audits and appeals.