PTINs for all: new IRS regs and proposals pick up speed.

• Position: FedTax - Preparer tax identification number

The IRS is proposing a new set of tax preparer regulations that will change who will be allowed to prepare and file taxes. The first step in the process--expanding use of the preparer tax identification number (PTIN) system--opens registration this month. Proposed and final regulations are necessary for implementation of many of the other recommendations, and the IRS says further information will be available as the process continues.

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Background

The IRS launched a review of the oversight of federal tax return preparers in June 2009. The IRS then kicked off the 2010 tax season by issuing a report (www.calcpa.org/PreparerReviewReport) proposing new registration, testing and continuing education of paid tax return preparers. Some findings in the report:

* 98 percent of the individuals who offered comments on oversight and enforcement for paid tax return preparers favor increased efforts;

* 88 percent of the individuals who expressed an opinion on registering paid tax return preparers favor registration;

* 90 percent of the individuals who commented on education and testing favor minimum education or testing requirements for paid tax return preparers;

* 98 percent of the individuals who commented on quality and ethics favor establishment of quality and ethics standards for paid tax return preparers;

* 99 percent of the individuals who provided comments on outreach and communication for paid tax return preparers favor increased efforts.

Upcoming Requirements

* All paid tax return preparers must register with the IRS, pay a registration fee and obtain a preparer tax identification number. If you already have a PTIN, you must still register under the new process.

* Competency tests for all paid tax return preparers except CPAs, attorneys and enrolled agents who are active and in good standing with their respective licensing agencies.

* Continuing professional education of 15 hours per year for all paid tax return preparers except CPAs, attorneys and enrolled agents.

* Tax compliance checks on all tax return preparers.

* Extending Circular 230 ethics standards to all preparers.

Please note: According to the IRS, many preparers do not clearly understand that if they prepare even one return after Dec. 31, 2010, for which they are paid, they will fall under the PTIN requirements. All paid tax return preparers who prepare all or substantially all of any tax return (individual, partnership, corporate, payroll, estate, excise...