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Registered Tax Return Preparer (RTRP) Requirements

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Tax return preparers that are compensated for federal tax returns are subject to new requirements from the
IRS which began in 2011. The requirements include the following:
  • Registration (in effect)
    o This is required for everyone preparing tax returns
  • Testing (began November 2011)
    o Registered tax preparers only. Attorneys, certified public accountants, and enrolled agents are exempt.
  • Continuing Education (effective 2012)
    o Registered tax preparers only. No additional education requirements imposed on Attorneys, certified public accountants, or enrolled agents.
Here is what you’ll be required to do…

First, Sign Up with the IRS Online.

All tax return preparers, including those tax return preparers who are attorneys, certified public accountants, and enrolled agents, must have PTINs if they prepare tax returns. This requirement began January 1, 2011. The online sign up form is available at http://www.irs.gov/taxpros/. The IRS is assessing an annual fee of $64.25 for the PTIN registration. Renewal PTINs can be obtained for $63.00.

Every single professional that prepares and files tax returns must renew and pay the fee annually using the new process even if you already have a Preparer Tax Identification Number (PTIN) number assigned from the IRS. If you already have a PTIN number, that number will stay the same.

Second, Complete a Competency Exam. Registered tax preparers only. Attorneys, certified public accountants, and enrolled agents are exempt.

Paid federal tax return preparers must pass a competency exam to officially become a registered tax return preparer. Registration is very important because if you have your PTIN before April 18, 2012, you may have until December 31, 2013 to complete this exam and you may take the test an unlimited number of times until you pass it. After the April 18, 2012 deadline, new PTIN applicants will be required to pass the exam before they receive a PTIN.

Attorneys, certified public accountants, and enrolled agents are exempt from the competency test requirement. Enrolled actuaries and enrolled retirement plan agents are exempt from the competency test requirement if they only prepare returns within the limited practice areas of these groups.

The test is expected to have 120 questions consisting of both multiple choice and true/false and the fee to take the test will be $116. Students will have 2.5 hours to complete the test. Since Prometric already facilitates the exams for IRS Enrolled Agents, the IRS has also selected them to administer the registered tax preparer competency exam. Scheduling the exam is initially to be done through the IRS.gov/PTIN website but it will soon be available through Prometric.com/IRS. Tests can be scheduled through March 31, 2012 and those exams will cover 2010 tax law. There will be blackout dates from April 1 – April 15 during which the exam will be updated and will not be available to students. As of April 16, 2012, the RTRP exam will begin to cover 2011 tax law.

The IRS has designed the RTRP basic preparer competency exam to cover ethical responsibilities, Form 1040 series, and related schedules and forms. The topics below are not set in stone and should serve as a general outline of potential topics on the IRS RTRP exam. Tax preparers must pass this exam in order to achieve the title Registered Tax Return Preparer (RTRP).

Domain 1: Preliminary Work & Collection of Taxpayer Data 15%
Domain 2: Treatment of Income and Assets 22%
Domain 3: Deductions and Credits 22%
Domain 4: Other Taxes 11%
Domain 5: Completion of the Filing Process 10%
Domain 6: Practices and Procedures 5%
Domain 7: Ethics Circular 230 15%
  100%

Additional information about the RTRP exam specifications can be found at this link: RTRP Exam Specs

Any or all of this material can be uploaded to your site, or referenced through your co-branded URL.

Continuing Education

Annual Continuing Education. Registered tax preparers only. Attorneys, certified public accountants, and enrolled agents are exempt from this new requirement.

A new continuing education requirement of 15 hours per year is expected to be implemented in 2012, but the IRS has not confirmed the date. Per the IRS, courses will need to include 3 hours of federal tax law updates, 2 hours of ethics, and 10 hours of other federal tax law. This will not apply to attorneys, certified public accountants, enrolled agents, enrolled actuaries, or enrolled retirement plan agents due to their existing education requirements.

Continuing education credit opportunities will be available from a variety of approved content providers, like Fast Forward Academy.

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