IRS Reveals New Requirement for Paid Tax Preparers

How well do you know your tax preparer? Do you know if they are registered with the IRS and State of CA? New rules and regulations have been passed by the IRS. If there is someone preparing tax returns without being registered with the IRS there is a new penalty from $50 up to $25,000 per calendar year. 

As of January 1, 2011 your paid Tax Preparer needs to have registered and paid a fee with the IRS. If they have been in the business for a while they should already have a Preparer Tax Identification Number (PTIN). Up until now anyone could get a PTIN at no cost. The IRS has made some requirement for Paid Tax Preparers:

1.     The Tax Preparer has to register their PTIN and pay a small service fee.

2.     In 2011 the IRS will have a Competency Exam that every Tax Preparer will have to pass. 

3.     A Tax Preparer will have to complete a certain number of hours of education every year.  The IRS hasn't determined a start date yet. 

The IRS is planning on having a link on their site for the tax payer to verify that their Tax Preparer is registered.

The State of California uses a similar program called California Tax Education Council (CTEC). The Tax Preparer is issued a CTEC number and the Tax Preparer has to complete 20 hours a year of continuing education (12 hours of federal taxation, 4 hours of California taxation, 2 hours of ethics and 2 hours of either federal or California), you must have a minimum of a $5,000 bond and pay a fee.  This process is done every year.  You can go onto the CTEC website to verify your Tax Preparer www.ctec.org/Preparerverify.aspx.

Before you have someone prepare your taxes make sure that they are registered with the IRS and CTEC.