What are the New Tax Preparer Requirements?

Chad Bice | May 3rd, 2010

The Internal Revenue Service has established new registration, competency and continuing education requirements for tax preparers who prepare returns for compensation. The new rules will not apply to the 2010 tax season, but are projected to begin with an online registration process on September 1, 2010.

We at Rea & Associates, Inc., applaud these new regulations that now encompass preparers who were previously unregulated. As certified public accountants, we have been governed by ethics, continuing education and professional standards for many years. We welcome the additional accountability and professional standards for these tax preparers.

IRS Commissioner Doug Shulman has noted that the IRS set two goals for the comprehensive changes – to increase taxpayer compliance and ensure uniform and high ethical standards of conduct for tax preparers. The new requirements were announced after six months of internal study and three public meetings with consumer advocacy groups, professional tax organizations and government agencies.

Taxpayer Preparer Regulations

All signing preparers, regardless of credentials or licenses, will be required to register with the IRS. The agency will charge a fee for the registration and renewal fee every three years. Those tax preparers who were not previously enrolled by state or federal agencies as tax preparers will be required to pay for and complete competency testing as well as annually receive mandatory continuing education. The new requirements will apply to all paid signing preparers, and are not limited to a threshold number of returns prepared or a dollar amount in fees. However, those who are not compensated for preparing returns will be exempt from the registration.

The IRS reported approximately 87 million federal tax individual tax returns were prepared by paid tax return preparers in 2008. As the tax code grows more and more complex, more individuals are turning to professionals for assistance – making the issue of professional standards even more important. The IRS estimates the number of preparers is between 900,000 and 1.2 million.

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