Final Circular 230 Regs. implement preparer registration rules.

• Author: Nevius, Alistair M.

The IRS issued final regulations on May 31 implementing components of its initiative to register and regulate all paid tax return preparers (T.D. 9527), The regulations, which finalize proposed regulations issued in August 2010 (REG-138637-07), revise Circular 230, Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, Enrolled Retirement Plan Agents, and Appraisers Before the Internal Revenue Service (31 C.F.R. Part 10).

Under the plan, all paid tax return preparers must register with the IRS by obtaining a preparer tax identification number (PTIN) and passing a tax compliance and suitability check. Preparers who are not a CPA, attorney, or enrolled agent must also pass a competency examination and fulfill continuing education requirements.

The final regulations adopt the proposed new designation of "registered tax return preparer." They set forth procedures and requirements for renewing that designation, including the composition of continuing education, if required. Registered tax return preparers must complete 15 hours of continuing education annually, of which at least 3 hours must be on federal tax law updates, 2 hours on tax-related ethics, and 10 hours on federal tax law topics.

In the preamble, the IRS noted that it was adopting the term "registered tax return preparer" despite objections to the designation from some commentators, including the AICPA. However, also on May 31, the IRS issued Notice 2011-45, which places restrictions on the use of the term by preparers. Specifically, individuals with a provisional PTIN--that is, who have not fulfilled all requirements, including some still under development--may not represent that they are registered tax return preparers or that they have passed the competency exam.

Registered tax return preparers must also comply with applicable rules in Circular 230 regarding advertising and solicitation. Under revised Section 10.30, registered tax return preparers may not use the term "certified" in describing their designation, and in Notice 2011-45 the IRS said it will further amend Section 10.30 to require individuals who represent themselves as registered tax return preparers in any paid advertising involving print, television, or radio to include in any such display or broadcast the statement, "The IRS does not endorse any particular individual tax return preparer. For more information on tax return preparers go to IRS.gov."

The IRS...