The IRS has recently released Notice 2011-6 (downloads as a pdf) which further explains its position with respect to oversight of tax professionals. It’s big news in the tax professional world.

Perhaps the most notable of the info posted in the Notice was an exception to the IRS requirements for certain tax preparers who will not be signing returns. Those non-signing preparers who are supervised by a CPA, attorney, enrolled agent or other Circular 230 practitioner will not be required to take a competency examination or meet continuing education requirements. There are some rules, though. The preparer must be 18 years old or older; obtain a PTIN; be supervised by a CPA, attorney, enrolled agent or other Circular 230 practitioner who signs the tax returns prepared by the non-signing preparer; and employed at the law firm, CPA firm, or other recognized firm of the tax return preparer who signs the tax return. There’s also the confusing requirement that the non-signing preparer pass the IRS required tax compliance check and suitability check “when those become available.” Fairly meaningless now.

Of course, this is all qualified by the IRS’ five little words: “until further guidance is issued.” Stay tuned.

One more thing: the IRS reminds tax professionals that any individuals who are compensated for preparing, or assisting in the preparation of, all or substantially all of a tax return or claim for refund of tax must have a PTIN. For more on PTIN registration, check out my prior post.

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Kelly Erb is a tax attorney, tax writer and podcaster.

6 Comments

  1. Nikki Kratzner, EA Reply

    The new exemption for people that work for CPA’s and EA’s drives me nuts. I think that everyone that put their hands on a tax return should pass the competency exam. Supposedly everyone with a basic knowledge of tax prep should be able to pass it. If you don’t have at least a basic knowledge you have no business doing even data entry on the returns. Does this mean the drones at HR Block are all exempt? Is that why this law was passed?

    • Nikki, Far be it for me to question the wisdom of the IRS (read with proper sarcasm, of course), but judging from the responses of the CPA groups and bigger tax prep companies, I’d say you’re right on target.

  2. so let me get this straight- you want $65 PTIN fee added to the costs of the competency tests? most places give 25% of the entire fee to part-time temps like me. as a newbie tax-preparer, i have nowhere to gain experience.

  3. Nikki Kratzner, EA Reply

    Leo, there are so many place to get cheap education on preparing taxes. You can take the HR Block course, you can get online classes, you can buy used workbooks 0n Ebay.

    It’s not like you’re bagging groceries, you’re preparing taxes. Without the proper knowledge you’re hurting your clients. You have the potential and ability to cause a tax burden, penalties and interest that could financial ruin someone if you’re not careful. The fees are kind of like those ads in the newspaper for free pets; if you charge someone then you’ll weed out the people that aren’t taking the associated responsibilities seriously.

    I know that many people think that anyone can prepare taxes and that it’s just data entry and following the form. I know there are plenty of preparers that operate that way; I fix their returns every year. Preparers HAVE to keep up with constantly changing tax laws. The competency exam as well as the required CPE’s helps to make sure that preparers are getting at least some updated information each year.

  4. Howard Schubert Reply

    I have had my own tax practice for the last 7 years. Before that I worked seasonally for H&R Block for 3 years. I find it ludicrous that I have to be tested and take continuing ed while the Blockers are exempt. The Block CPA or EA is only going to rubber stamp the return prepared by the employee and based on my experience with Block, most of the seasonal help can do no more than use the tax prep program and often not very well.

  5. I am wtaching the US isue with interest. NZ regulatory regime is a be lax and may be following the AU regime (exams and continuing eduacation). I am a member of a professional organiastion http://www.tinz.co.nz not be regulation but by choice. continuning education is a requirement of the body. I have worked with tax since 1980 but will never be a CPA or equivalent once again by choice. I prefer consumer choice rather tahn goverment regulation.
    The Tax Man Ltd (New Zealand)

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