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Tax Preparer Certification Requirements

New regulations were put into place in September 2010 for the certification, or registration, of tax preparers. The new regulations, as of this writing, are being enforced through three phases that will begin January 1, 2011, and carry on throughout the year.

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Required Steps to Becoming a Registered Tax Preparer

Step 1: Acquire a PTIN (Preparer Tax Identification Number)

On September 1, 2010, the IRS began the new process of tax preparer registration. The first phase of this new registration, or certification, requirement will begin January 1, 2011, with the preparer tax identification number (PTIN). This number will be at the bottom of any tax form that the preparer handles to ensure accountability.

To obtain a PTIN, tax preparers first create an account with the IRS, which can be done on their website (www.irs.gov). Once the account is created, tax preparers can submit an online application for a PTIN. The application requires reporting of personal information, including the tax preparer's social security number, basic personal and business information, explanations of any convictions or tax issues, the previous year's tax return and any certifications. After completing the application and submitting the application fee, a PTIN will be sent to the tax preparer via e-mail. The entire process of obtaining a PTIN takes roughly 15 minutes online but up to six weeks if done through the mail.

Step 2: Pass Competency Exam

The second phase of the registration process is the competency exam. The open-book test will be given online and will require a registration fee. After passing the exam, tax preparers will be considered registered with the IRS.

Any tax preparer who is an attorney, CPA or Enrolled Agent will be exempt from the exam as long as they're in good standing with their companies and certifying authorities; the exam is otherwise mandatory. The IRS is also offering an incentive to tax preparers who obtain their new PTIN before the test is available; these tax preparers will have until the end of 2013 to take the exam. However, if tax preparers postpone applying for a PTIN until the competency exam is available, they will be required to pass the exam before they are granted a PTIN and are legally authorized to prepare federal tax returns (www.irs.gov). For the official release date of the exam, tax preparers should check the IRS website for the latest information (www.irs.gov).

Step 3: Maintain Ethical Code and Continue Education

The start date of the final registration phase hasn't been determined, but it will involve fulfilling annual continuing education requirements. Tax preparers will be notified through their PTIN accounts when the continuing education requirement is initiated. Once again, attorneys, CPAs and Enrolled Agents are exempt from this requirement because continuing education credits are incorporated into their professional accreditations.

Even before the continuing education phase is initiated, the responsibility to uphold the ethical codes set by the U.S. Department of Treasury is expected of each registered tax preparer. Failure to do so could result in the revocation of the registration, and, therefore, tax preparers would be unable to continue handling official federal tax documents.

Career Outlook

The U.S. Bureau of Labor Statistics reported that the median annual salary for tax preparers was $33,730 in May of 2012. The number of employment opportunities for these professionals was expected to increase 10% from 2012-2022, which is about average.

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