Frequently Asked Questions: Preparer Credentials
1. How does someone become a Registered Tax Return Preparer? (revised 2/22/12)
In order to become an RTRP you must obtain a Preparer Tax Identification Number (PTIN), take and pass the RTRP Competency Test and pass a tax compliance check. After you become an RTRP, you must renew your PTIN each year and obtain 15 hours of continuing education annually from IRS-approved providers.
2. What practice rights do Registered Tax Return Preparers have? (posted 1/22/10)
Registered tax return preparers have the right to prepare and sign tax returns and claims for refund. RTRPs also may represent clients before revenue agents, customer service representatives, or similar officers and employees of the IRS (including the Taxpayer Advocate Service) during an examination if they signed the tax return or claim for refund for the tax period under examination.
3. How does someone become an Enrolled Agent? (posted 2/22/12)
Learn about becoming an enrolled agent here.
4. What practice rights do Enrolled Agents have? (posted 2/22/12)
Enrolled agents, like attorneys and certified public accountants (CPAs), have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.
5. What is the difference between an Enrolled Agent and a Registered Tax Return Preparer? How do I decide which I should be? (revised 2/22/12)
Both enrolled agents and RTRPs have the right to prepare and sign any tax forms. But the representation rights of enrolled agents before the IRS are generally unlimited whereas the representation rights of RTRPs are limited. RTRPs are limited to representing clients before an Examination function of the IRS when the RTRP prepared the return under examination.
Enrolled agents may represent any client on any return or issue, including Appeals and Collection issues. RTRPs may wish to become enrolled agents as the next step in their careers.
6. When can I use the Registered Tax Return Preparer designation? (posted 11/9/11)
You can use the Registered Tax Return Preparer designation when you receive the Registered Tax Return Preparer certificate from the IRS (following completion of a tax compliance check and after achieving a passing score on the RTRP Competency Test). Once you become a Registered Tax Return Preparer, you must display the following disclaimer in any paid advertising involving print, television or radio, in which you represent yourself as a Registered Tax Return Preparer:
“The IRS does not endorse any particular individual tax return preparer. For more information on tax return preparers go to IRS.gov.”
As a Registered Tax Return Preparer, you must complete your annual continuing education requirement and renew your PTIN annually. If you do not complete these requirements or otherwise fail to comply with Circular 230, you may be suspended or disbarred from practice before the IRS. Individuals who have been suspended or disbarred from practice before the IRS are precluded from using the Registered Tax Return Preparer designation.
7. How much tax advice can registered tax return preparers give to clients? (posted 2/27/12)
Section 10.3(f)(3) of Circular 230 provides that a registered tax return preparer’s authorization to practice “does not include the authority to provide tax advice to a client or another person except as necessary to prepare a tax return, claim for refund, or other document intended to be submitted to the Internal Revenue Service.” The IRS received comments after the final regulations were published suggesting that this language is ambiguous. To clarify, the IRS interprets this provision to permit registered tax return preparers to provide advice to a client that is reasonably necessary to prepare a tax return, claim for refund, or other document intended to be submitted to the Internal Revenue Service for a current or future tax period, regardless of whether the client has engaged the registered tax return preparer to prepare the tax return, claim for refund or other document for the tax period.
1. Do Accredited Council of Accountancy for Taxation (ACAT) credential holders have to obtain a PTIN and pass the IRS registered tax return preparer test? (revised 2/22/12)
Yes, ACAT credential holders who are paid to prepare all or substantially all of a federal tax return need to obtain a PTIN. They also need to pass the RTRP test if they prepare Form 1040 series returns unless they are also attorneys, certified public accountants, or enrolled agents, or are a supervised preparer. As for continuing professional education, they are subject to the RTRP CE requirements if they prepare Form 1040 series returns unless they are also attorneys, CPAs, enrolled agents, enrolled actuaries or enrolled retirement plan agents, or are a supervised return preparer.
2. How do the regulations affect registered or licensed public accountants? Do they have to test? (revised 6/30/11)
In many states, a registered or licensed public accountant (LPA) has the same rights and privileges as a certified public accountant. Thus, an LPA in those states is eligible to practice before the IRS by virtue of their public accountant’s license and these individuals are not required to pass the IRS’ competency test and become registered tax return preparers to prepare tax returns or claims for refunds for compensation.
The following is a non-exclusive list of states where a LPA has the same rights and privileges as a CPA: Alabama, Alaska, Arkansas, California, Colorado (Registered Public Accountants only), Connecticut, Hawaii, Idaho, Maine, Montana, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina (Public Accountants only), South Dakota, Tennessee, Vermont, and West Virginia.
LPAs in the following states do not have the same rights and privileges as a certified public accountant and, therefore, will be required to pass the IRS' return preparer examination and satisfy the CPE requirements for tax return preparers to prepare any federal tax return for compensation (unless the LPA is an attorney or enrolled agent): Delaware, Illinois, Iowa, Kansas, Michigan, Oregon (unless the person qualified for, and applied to take, the Uniform CPA examination before Jan. 1, 2002), and South Carolina (Accounting Practitioners).
LPAs in other states should review the laws of the state in which they are licensed to determine whether they have the same rights and privileges as a certified public accountant.
3. In Minnesota, we have Registered Public Accountants. These individuals are governed by the Minnesota Board of Accountancy, must register with the Board, pay a fee and have continuing education requirements and ethics requirements. Do they have to test? (posted 1/22/10)
In general, a registered (or licensed) public accountant may practice before the IRS if the registered (or licensed) public accountant has the same rights and privileges as a certified public accountant under state law. Although the IRS has reviewed the laws of 29 states to determine if the registered (or licensed) public accountants in those states have the same rights and privileges as a CPA, Minnesota is not one of those 29 states. Accordingly, the registered public accountants in Minnesota should review their own state laws to determine whether they have the same rights and privileges as a CPA. until the IRS has an opportunity to formally consider whether Minnesota’s registered public accountants are qualified to practice as CPAs.
4. Are preparers who are registered by the states of California or Oregon (California Tax Return Preparers and Oregon Licensed Tax Preparers/Consultants) exempt from testing and continuing education requirements? (posted 1/22/10)
No. If these individuals prepare Form 1040 series returns and are not supervised preparers, they are required to pass the RTRP test and complete the continuing education requirements unless they are an attorney, certified public accountant or an enrolled agent.