Legislative / Regulatory | Taxation | Training & CPE

PTIN program: Taking tests, dusting for prints


The bid to register tax preparers is getting interesting.

Let's start with the news that the IRS apparently is considering a plan to fingerprint non-CPAs who are required to obtain a preparer tax identification number, or PTIN.

As you read, keep in mind that the IRS is NOT currently conducting fingerprint checks as part of the PTIN application process, but certain applicants may be fingerprinted in the future.

The following comes from the AICPA:

"Under IRS regulations, in general, the non-CPA employees of a CPA firm who prepare all or substantially all of a tax return, and who are supervised by a CPA who signs the firm’s tax returns, are considered non-signing preparers by the IRS. Notice 2011-6 exempted non-signers from the continuing education and testing aspects of the registration program but did indicate that the IRS would require non-signers to undergo tax compliance and suitability checks, once they become available.

"The IRS has now indicated that fingerprinting, a one-time practice, is considered part of the suitability check process."

The AICPA stresses that (a) the procedure, timing and costs of the fingerprinting process have not been finalized, and (b) it is keeping a close eye on the situation. We'll undoubtedly be hearing more about that soon, so stay tuned.

What HAVE been finalized are the specs for the competency test that all registered preparers must take. That test will be available later this fall.

Keep in mind that CPAs are exempt from the PTIN testing and CPE requirements.

Kelly Phillips Erb (aka "TaxGirl") leafed through the specs and came up with this breakdown of what preparers will have to know. It comes directly from her blog:

  • 15 percent preliminary work and collection of taxpayer data -– includes determination of filing status and filing requirements, as well as verifying taxpayer identifying information.
  • 22 percent treatment of income and assets –- includes types and classification of income, distinguishing taxable income from nontaxable income and the treatment of self-employment income.
  • 22 percent deductions and credits –- includes recognizing itemized deductions and noting applicable credits.
  • 11 percent other taxes -– includes understanding how the AMT might apply and allocating self-employment tax.
  • 10 percent completion of the filing process –- includes review of the return, comprehension of signature/filing requirements and payment options.
  • 5 percent practices and procedures -– includes rules for retaining copies of tax returns and safeguarding taxpayer information.
  • 15 percent Ethics Circular 230 subparts A, B and C (excluding D, E) –- includes what constitutes practice before IRS and due diligence standards.

"The test will be approximately 120 questions long, consisting of multiple and true / false (ugh)," Kelly writes. "The IRS estimates that it will take between 2 and 3 hours to complete the test, which must be taken at one of a number of nationwide sites."

Who could have predicted there would be so many issues surrounding the PTIN procedure? (Answer: Everyone.)


Bill Sheridan