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.
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.
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.
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] 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.
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.
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.
Subject areas may include:[6] 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.