FS-2011-12, November 2011
The Internal Revenue Service currently is implementing an oversight program to increase the quality of the tax preparation industry and to improve services to taxpayers. This program requires all paid tax return preparers to register with the IRS each year and have a Preparer Tax Identification Number (PTIN).
Certain tax return preparers who prepare the Form 1040 series returns must take additional steps. These preparers must pass a one-time competency test, a tax compliance check, and a suitability check. Preparers who meet these requirements will be given a new designation: Registered Tax Return Preparer. Additionally, they must complete 15 hours of continuing education each year, starting in 2012.
Currently, PTINs are issued with either an active or provisional status. Active PTINs are given to Enrolled Agents, Certified Public Accountants and attorneys, among others, because these individuals are not required to take the competency test. Tax return preparers who must pass the competency test are given a provisional PTIN. These individuals have until Dec. 31, 2013, to pass the test.
RTRP Competency Test Overview
The fee for taking the Registered Tax Return Preparer competency test is $116. The test is a timed, 2½ hour exam that will cover the Tax Year 2010 Form 1040 series and its related tax schedules. There are 120 questions in a combination of multiple choice and true or false formats. Test takers cannot bring any resource materials but they will have access to the Form 1040, Form 1040 instructions, and Publication 17, Your Federal Income Tax.
The test is available in English only at this time and generally will be administered in a computer based testing format. The test must be taken at Prometric Inc., test centers. Prometric will eventually offer the test at more than 260 domestic centers nationwide, but it is not available at all locations currently. Those who initially do not locate a nearby test site should check back because additional test sites will be added daily.
There is no limit on the number of times the test can be taken, but preparers must pass the test only once. If an individual takes the test more than once, the $116 fee will apply each time the individual takes the test.
Initial test takers won’t receive their test scores for two to six weeks to allow the IRS to validate the exam and determine the pass/fail cutoff. Once validation is complete, around mid-January, those taking the computer-based test will receive their scores at the test center immediately upon completing the test.
Who Must Take the Registered Tax Return Preparer Test
A paid tax return preparer must take the Registered Tax Return Preparer competency test and meet the other requirements for becoming a Registered Tax Return Preparer unless the tax return preparer is a:
- Certified Public Accountant, attorney, or an Enrolled Agent;
- Supervised preparer, which is an individual who:
- Does not, and is not required to, sign a tax return as paid preparer,
- Works at a firm at least 80 percent owned by CPAs, attorneys or Enrolled Agents, and
- Is supervised by a CPA, attorney or Enrolled Agent
- Preparer who does not, for compensation, prepare, or assist in the preparation of, all or substantially all of any Form 1040 series return. For purposes of this exemption, Forms 1040-PR and 1040-SS are not Form 1040 series returns.
Paid tax return preparers will be notified by the IRS of their test requirement either in their welcome letter if they are obtaining a new PTIN or in their “next steps” notification when they renew their PTINs.
Preparing for the Test
The IRS has released test specifications which outline the general individual income tax topics that will be covered by the exam. The IRS also has released a list of publications and instructions from which the test topics were taken. The test specifications and publications, as well as a tutorial, a video on what to expect test day, and a Candidate Information Bulletin, are available at /taxpros/tests.
Because the test will cover 2010 tax issues, the IRS encourages preparers to download the publications and save them to their computers so they can be sure they have the correct tax year as a study guide.
Scheduling a Test and Paying the Fee
Preparers who need to take the test can schedule an appointment beginning next week through their online PTIN account at /ptin. Preparers must pay the $116 test fee at the time they are scheduling their appointment. Those who do not have an online PTIN account can make test appointments and pay by phone at 855-477-3926.
The test is not being administered at international locations currently, but international test sites may be added in the future.