IRS Updates FAQ on Tax Return Preparer Requirements

All tax return preparers who are compensated for preparing, or assisting in the preparation of, all or substantially all of a U.S. federal tax return or claim for refund must obtain a PTIN. Refer to the Scenarios section for additional guidance.

2. I already have a PTIN. Do I need to take any action this year? (revised 9/28/2010)

Yes. All federal tax return preparers, even those who already have a PTIN, will need to register in the new system now available. All preparers will need to be registered on the new system and have a PTIN prior to filing any return after Dec. 31, 2010. As long as the IRS can validate the ownership of the existing PTIN, the same number will be reassigned once the appropriate information is provided and the user fee is paid.

3. When multiple paid preparers are involved in preparation and/or review of a return, who is required to sign the return? (posted 8/11/10)

Existing Treasury regulations under sections 1.6695-1(b) and 301.7701-15(b)(1) provide that a signing tax return preparer is the individual tax return preparer who has the primary responsibility for the overall accuracy of the preparation of a return. The new requirements requiring all preparers to register and obtain a Preparer Tax Identification Number (PTIN) do not change the existing rules regarding who is the signing tax return preparer.

4. Will non-signing preparers have to be disclosed on each return prepared even if another preparer reviews and signs it? (posted 8/11/10)

No, at least initially, there is no plan to expand the paid preparer section of the return. The name of any non-signing preparer will not be disclosed on the return, but they will still be required to have a PTIN and meet competency testing and continuing education requirements as applicable.

5. Can multiple individuals or one office share one PTIN? (posted 8/11/10)

No, a PTIN is an individual preparer's number. Each preparer must obtain his or her own PTIN.

6. If an employee of a business prepares the business' tax returns as part of their job responsibilities, do the regulations affect them? (revised 9/28/10)

No. An employee who prepares his employer's returns is not required to sign as a paid preparer. Accordingly, unless the employee prepares other federal tax returns for compensation, he or she is not required to register and obtain a PTIN.

7. Does the PTIN requirement apply to individuals who only prepare payroll or other non-1040 series returns? (revised 9/28/10)

Yes. All paid tax return preparers are required to obtain a PTIN.

8. If I don't obtain (or renew) a PTIN by January 1, 2011, can I still prepare returns? (posted 8/18/10)

Yes, but only after you sign up through the new online registration system, pay the fee, and obtain (or renew) a PTIN.

No, she is not a tax return preparer, and is not required to have a PTIN.

2. I am a tax return preparer, and I have a PTIN. Every tax filing season I hire two paid interns from the accounting program at a local college to help me during the busy season. The interns perform data entry from the tax organizer that my clients fill out, and assemble the documentation that the clients have submitted. Where clients have submitted incomplete information, or more information is needed, the interns may call clients to gather information missing from the tax organizer, but they are not allowed to provide advice or answer tax law questions. I prepare and sign all my clients' returns. Do my interns need to have a PTIN? (posted 9/28/10)

No, the interns are not tax return preparers, and are not required to have a PTIN.

3. Same facts as above, but in order to help my interns get exposure to the tax system, I allow them to work with clients who have very simple tax situations, and prepare the Form 1040-EZ. I review the forms carefully, and sign them. Are my interns required to have PTINs? (posted 9/28/10)

Yes, the interns are tax return preparers and are required to have a PTIN, whether or not they sign the returns.

4. I am a tax return preparer, and I have a PTIN. I have an administrative assistant in the office who also performs data entry during tax filing season. At times, clients call and provide him with information, which he records in the system. Using the data he has entered, I meet with my clients and provide advice as needed. I then prepare and sign their returns. Is my administrative assistant required to have a PTIN? (posted 9/28/10)

No, the administrative assistant is not a tax return preparer, and is not required to have a PTIN.

5. I am a retired tax professional, and I volunteer during the tax filing season. I volunteer at a VITA site, where I prepare individual tax returns for lower-income individuals for no compensation. Do I need to have a PTIN? (posted 9/28/10)

No, you are not a tax return preparer and you are not required to have a PTIN.

6. I run a small tax return preparation business that is heavily software-based. I employ four associates who sit with taxpayers and walk through a step-by-step software program that uses an "interview" process that results in a draft tax return. I check and sign the returns, and I have a PTIN. Do my four associates need to have a PTIN? (posted 9/28/10)

You will need to perform additional analysis to determine whether your four associates must have a PTIN. The answer depends on the specific circumstances of your firm. In general, if individuals prepare all or substantially all of a tax return, including making determinations that affect tax liability, they must have a PTIN.

You must have access to a computer with internet service. There are no additional minimum technical requirements to use the online PTIN application. However, the application may function at reduced speed if you have limited memory.

2. Can I exit the application once I start? (posted 9/28/2010)

Yes, you may exit your PTIN application at any time by pressing the cancel button. Your incomplete application will appear the next time you login to the IRS Tax Professional PTIN Sign-up System.

3. What if I can't find my temporary password in my email box? (posted 9/28/2010)

Check your junk or spam folder.

4. What name should I use on the PTIN application? (posted 9/28/2010)

The name you should use when applying for a PTIN is the name you used on your most recent Form 1040 income tax return.

5. What format should I use when entering the address from my most recent Form 1040 return? (posted 9/28/2010)

Enter your address exactly as it appears on your most recent tax return, including any special characters.

6. Why couldn't you authenticate my identity? (posted 9/28/2010)

For security purposes, the IRS verifies that information on your PTIN application matches information about you on other IRS systems. If any of the information is missing or does not match (including first and last name, social security number, date of birth, and the address and filing status from your most recent Form 1040 income tax return), a PTIN cannot be issued.

If you are using the online registration system, check the information and try again. If you need to verify the information from your most recent Form 1040 income tax return, contact the IRS at 1-800-829-1040.

7. What do you mean by "doing business as"? (posted 9/28/2010)

"Doing business as" is the name under which your business operates.

8. I can't find my professional credential numbers. (posted 9/28/2010)

Enrolled agents can contact the IRS Office of Professional Responsibility at (202) 927-3397.

Certified Public Accountants can find contact information for all state boards of accountancy at www.nasba.org.

Attorneys can find contact information for all state bar associations at www.abanet.org.

9. What is an EIN, EFIN, or CAF? (posted 9/28/2010)

An Employer Identification Number (EIN) is a federal identification number assigned by the IRS when an individual or business applies on Form SS-4, Application for Employer Identification Number. It is a nine digit number assigned to corporations, partnerships, certain sole proprietorships, and other entities for tax filing and reporting purposes.

An Electronic Filing Identification Number (EFIN) is issued to firms that have been accepted for participation in IRS e-file as authorized e-file providers.

A Centralized Authorization File (CAF) number is assigned to a tax professional when a taxpayer submits either a Form 2848 or Form 8821 to the CAF designating the tax professional as a representative or an appointee.

10. Why don't I have to enter my current PTIN? (posted 9/28/2010)

After you enter information to authenticate your identity, the system will search for an existing PTIN assigned to a matching name, social security, and date of birth. If matching information is located, you will be assigned the same PTIN. If it does not match, you will get a new PTIN.

11. Why wasn't I re-issued the same PTIN I already have? (posted 9/28/2010)

Information entered to authenticate your identity did not match information on your original PTIN application, such as the name, social security number, or date of birth. Be sure to use the newly assigned PTIN on all returns and not the previous PTIN.

12. Will bankruptcy affect my ability to practice? (posted 9/28/2010)

Bankruptcy generally will not affect a PTIN application. A balance due account in bankruptcy status will not result in a preparer failing the tax compliance test. But, for an account to be in bankruptcy status, the taxpayer must have included the IRS debt in the bankruptcy filing.

13. What do you mean by "provisional PTIN"? (posted 9/28/2010)

Provisional PTINs are issued for three reasons: 1) The applicant is subject to testing requirements which have not yet been satisfied, 2) The applicant has indicated he/she is not in compliance with their federal tax responsibilities, and/or 3) The applicant has indicated he/she has been convicted of a felony in the past 10 years. The provisional status is temporary until the condition is resolved or reviewed and cleared.

14. I don't have a social security number. Can I obtain a PTIN? (posted 9/28/2010)

Generally a social security number is required to obtain a PTIN, except for two situations: 1) U.S. residents who have a conscientious objection to obtaining a social security number for religious reasons, and 2) persons who do not reside in the United States and who are not eligible to obtain a social security number.

These individuals must submit one of the following supplemental forms with their application, including supporting identity documentation as explained in the instructions.

• Form 8945 (PTIN Supplemental Application For U.S. Citizens Without A Social Security Number Due To Conscientious Religious Objection)

• Form 8946 (PTIN Supplemental Application For Foreign Persons Without A Social Security Number)

Yes, you must pay the fee online if you use the online system. If you prefer to send a check or money order, you will need to apply using a paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application. The paper application will take 4-6 weeks to process.

16. When paying the application fee online, does the payment card have to be in my name? (posted 9/28/2010)

No. There are separate entries for the card information, including the name, zip code, and security code. The information will be validated against the credit card number.

17. What online payment methods are available? (posted 9/28/2010)

Payment options include credit card (Visa, MasterCard, Discover), debit card, or E-Check.

18. Do I have to apply for a PTIN online? (posted 9/28/2010)

No, you may submit a paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application. The paper application will take 4-6 weeks to process.

19. Who can I contact for help in filling out the application? (posted 9/28/2010)

The IRS Tax Professional PTIN Information Line is available to provide assistance during regular business hours on Monday through Friday, 8:00 a.m. to 5:00 p.m. Central:

• Toll-free: 877-613-PTIN (7846)

• TTY: 877-613-3686

• International: +1 319-464-3272

You must wait until you renew your PTIN in order to change the name associated with your actual PTIN. However, you can change the name associated with your online account from the Main Menu page: View/Edit Login Information.

Individuals generally are required to provide their social security numbers when they obtain a PTIN. However, U.S. residents who have a conscientious objection to obtaining a social security number for religious reasons and foreign persons who are not eligible to obtain a social security number and have a non-U.S. address may obtain a PTIN without a social security number. These individuals will be required to provide supplemental documentation to verify their identity and substantiate their eligibility for a PTIN under these specific exceptions. More guidance will be available before the PTIN requirement begins.

2. How do U.S. residents without a social security number due to a conscientious objection for religious reasons obtain a PTIN? (posted 9/28/10)

U.S. residents who have a conscientious objection to obtaining a social security number for religious reasons must complete Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, either online or on paper, and a paper Form 8945, PTIN Supplemental Application For U.S. Citizens Without a Social Security Number Due To Conscientious Religious Objection.

Documentation to substantiate identity, U.S. citizenship, and status as a member of a recognized religious group must accompany the Form 8945. Documentation requirements and mailing information are included in the Form 8945 instructions. An online Form W-12 combined with a paper Form 8945 will take 2-4 weeks to process versus an all paper application which will take 4-6 weeks.

3. How do foreign preparers without a social security number obtain a PTIN? (posted 9/28/10)

A foreign preparer who does not have and is not eligible to obtain a social security number and is neither a citizen of the U.S. nor a resident alien of the U.S. as defined in section 7701(b)(1)(A) will need to complete the Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, either online or on paper, and a paper Form 8946, PTIN Supplemental Application For Foreign Persons Without a Social Security Number. Only preparers that have a foreign (non-U.S.) address may file this form.

Documentation to substantiate identity and eligibility must accompany the Form 8946. Documentation requirements and mailing information are included in the Form 8946 instructions. An online Form W-12 combined with a paper Form 8946 will take 2-4 weeks to process versus an all paper application which will take 4-6 weeks.

Yes. All paid tax return preparers will have to pay a fee to obtain and renew their PTINs. This fee is in addition to any fee that paid tax return preparers must pay for any other certifications or licenses they hold. Because attorneys, CPAs and enrolled agents are exempt from testing, they will not be required to pay the separate testing fee.

The IRS is recalculating the $125 enrolled agent renewal fee. A reduced fee amount will be announced in the future.

2. What is the amount of the fee for obtaining a PTIN (if I don't already have one) or renewing an existing PTIN ( if I already have one)? (revised 9/28/10)

The annual fee is $64.25 per individual and is the same regardless of whether you are obtaining a PTIN or re-newing an existing PTIN. The amount of the fee may change in future years as the actual program costs are periodically reevaluated.

3. How was the fee amount determined? (posted 8/19/10)

The fee is based on two underlying costs. The IRS will collect $50 per person to pay for outreach, technology, and compliance efforts associated with the new program. A third-part vendor will receive $14.25 per person to operate the online system and provide customer support.

User fees are directed by the Office of Management and Budget (OMB) to be charged by agencies to recover the cost of services that convey special benefits beyond those available to the general public, such as the authority to preparer federal tax returns for compensation.

Yes. The practice of enrolled agents before the IRS will not be limited. The practice of the new category of preparers will be limited to preparing tax returns for compensation and representing taxpayers in Examination when the return under examination was a return that they prepared.

2. Will there be a new designation for preparers who pass the competency test? (revised 9/28/10)

Yes. Once an individual possesses a valid PTIN and passes an IRS competency test, they will become a Registered Tax Return Preparer.

3. How will the conditions to practice before the IRS be changed by the new regulations? Currently tax practitioners that are not attorneys, certified public accountants, or enrolled agents have limited practice before the IRS. (posted 1/22/10)

The new category of preparers who pass the competency test will have the same limited practice rights that an unenrolled preparer currently has.

Yes, ACAT credential holders who are paid to prepare all or substantially all of a federal tax return will need to obtain a PTIN. They will also need to pass the competency exam unless they are also attorneys, certified public accountants, or enrolled agents. As for continuing professional education, they will be subject to the new requirements unless they are also attorneys, CPAs, enrolled agents, enrolled actuaries or enrolled retirement plan agents.

2. How will the new regulations affect registered or licensed public accountants? Would they have to test? (revised 8/11/10)

In many states, a registered or licensed public accountant (LPA) has the same rights and privileges as a certified public accountant. Thus, an LPA in those states is eligible to practice before the IRS by virtue of their public accountant's license and these individuals will not be required to pass the IRS' return preparer examination or satisfy the CPE requirements for tax return preparers.

The following is a non-exclusive list of states where a LPA has the same rights and privileges as a CPA: Alabama, Alaska, Arkansas, California, Colorado (Registered Public Accountants only), Connecticut, Hawaii, Idaho, Maine, Montana, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, and West Virginia.

LPAs in the following states do not have the same rights and privileges as a certified public accountant and, therefore, will be required to pass the IRS' return preparer examination and satisfy the CPE requirements for tax return preparers to prepare any federal tax return for compensation (unless the LPA is an attorney or enrolled agent): Delaware, Illinois, Iowa, Kansas, Michigan, Oregon (unless the person qualified for, and applied to take, the Uniform CPA examination before Jan. 1, 2002), and South Carolina

LPAs in other states should review the laws of the state in which they are licensed to determine whether they have the same rights and privileges as a certified public accountant.

3. In Minnesota, we have Registered Public Accountants. These individuals are governed by the Minnesota Board of Accountancy, must register with the Board, pay a fee and have continuing education requirements and ethics requirements. Will they have to test? (posted 1/22/10)

In general, a registered (or licensed) public accountant may practice before the IRS if the registered (or licensed) public accountant has the same rights and privileges as a certified public accountant under state law. Although the IRS has reviewed the laws of 29 states to determine if the registered (or licensed) public accountants in those states have the same rights and privileges as a CPA, Minnesota is not one of those 29 states. Accordingly, the registered public accountants in Minnesota should review their own state laws to determine whether they have the same rights and privileges as a CPA. until the Office of Professional Responsibility has an opportunity to formally consider whether Minnesota's registered public accountants are qualified to practice as CPAs.

4. Will preparers who are registered by the states of California or Oregon (California Tax Return Preparers and Oregon Licensed Tax Preparers/Consultants) be exempt from testing and continuing education requirements? (posted 1/22/10)

Only attorneys, certified public accountants and enrolled agents will be exempt from testing and continuing education requirements.

5. How are enrolled retirement plan agents and enrolled actuaries affected by the recommendations? (posted 7/22/10)

Enrolled retirement plan agents and enrolled actuaries must obtain a PTIN if they are compensated for preparing, or assisting in the preparation of, all or substantially all of a federal tax return or claim for refund. But they will be exempt from the competency test requirement if they only prepare returns within the limited practice areas of these groups.

6. Are individuals who are active attorneys, certified public accountants or enrolled agents be required to obtain a PTIN if they do not prepare all or substantially all of any tax return? (revised 5/20/10)

Attorneys, certified public accountants and enrolled agents do not need to obtain a PTIN unless they prepare for compensation all or substantially all of a federal tax return or claim for refund.

7. Are e-file transmitters or intermediate service providers that do not prepare returns subject to the new requirements? (revised 9/1/10)

No. E-file providers that assist in the formatting and transmission of tax returns electronically, but do not prepare all or substantially all of a federal tax return or claim for refund for compensation, are not the focus of the new regulations.

The IRS has proposed that individuals who are not an attorney, certified public accountant, or enrolled agent will have to pass a competency test to officially become a Registered Tax Return Preparer. The IRS expects testing to begin in mid-2011.

Tax return preparers who have PTINs before testing becomes available will have until Dec. 31, 2013, to pass the competency test. After testing becomes available, new tax return preparers will be required to pass the competency test before they can obtain a PTIN.

Enrolled actuaries and enrolled retirement plan agents will also be exempt if they only prepare returns within their limited practice areas. More guidance on testing, the testing fee, and any other exempt individuals will be available in spring 2011.

2. Will paid tax return preparers be limited to preparing only the types of tax returns that they have successfully tested on? (posted 3/29/10)

Yes, for Form 1040 series tax returns. The IRS will issue additional guidance or instructions for other tax returns.

3. What language(s) will the competency test be available in? (revised 4/22/10)

At least initially, the test will only be available in English.

4. Will the testing be done by the same firm that administers the enrolled agent exam? Or will IRS be doing the testing? (posted 1/22/10)

The testing likely will be done by an external vendor(s). The vendor(s) is unknown at this time.

5. Will a CPA who keeps his or her license current but is considered inactive be subject to testing? (posted 1/22/10)

Yes. Only attorneys, certified public accountants, or enrolled agents who are active and in good standing with their respective licensing agencies are exempt from competency testing.

6. Will the tests be open book or resource assisted? (revised 7/20/10)

Certain resources will be permitted and provided at the testing center. Stay tuned to the IRS.gov Tax Professionals page for information on this issue.

7. The two competency tests are described as covering: 1) Wage & non business 1040 and 2) Wage and Small Business 1040. What does small business include? And how would this impact those who prepare other business returns? (revised 7/20/10)

For competency testing purposes, small business will include Form 1040 Schedules C, E and F and various other 1040 related forms. Appendix I of the Return Preparer Review report contains a detailed list.

Additional guidance for individuals who do not prepare any Form 1040 series returns and who are not an attorney, CPA, or enrolled agent will be provided when testing is implemented.

The IRS plans to add a third test with regard to business tax rules after the three-year implementation phase is completed.

8. Will testing apply to individuals who only prepare payroll or other non-1040 series returns? (revised 9/28/10)

The initial two tests will be for individuals who prepare Form 1040 series returns. Additional guidance for individuals who do not prepare any Form 1040 series returns and who are not an attorney, CPA, or enrolled agent will be provided when testing is implemented.

Individuals who are enrolled retirement plan agents or enrolled actuaries will be exempt from the competency test requirement if they only prepare returns within the limited practice areas of these groups.

9. What is the required percentage to pass the competency test? (posted 1/22/10)

This has not been determined. Stay tuned to the IRS.gov Tax Professionals page for information on this issue.

10. What will happen to an unenrolled return preparer who obtains a PTIN but does not pass the competency test by Dec. 31, 2013? (revised 9/28/10)

The IRS will contact them proposing to deactivate their PTIN and remove them from the list of registered preparers, as well as, explaining the appeals process.

11. When will testing begin? What is the deadline for passing? How many attempts will I have to pass? How long will it be? What is the cost? (posted 8/11/10)

Testing is expected by begin in mid-2011. Those individuals who have a valid PTIN when testing begins will have until Dec. 31, 2013, to pass the test and may take the test an unlimited number of times to pass it. There will be a fee to take the test and that fee will be due each time the individual attempts to pass the test. The IRS has not determined the amount of the fee, the length of the test, and other test details at this time. For the latest information on this issue, stay tuned to the Tax Professionals page on IRS.gov.

12. Will the test be offered online or will I have to go to a designated location? (posted 8/11/10)

Those who need to test will need to physically go to a testing site, authenticate their identity, and take the test in person at the testing site. More information about testing, including test locations and test procedures, will be posted on the Tax Professionals page on IRS.gov when it becomes available.

13. Will the IRS offer study courses prior to testing? (posted 8/11/10)

The IRS will provide basic information about the forms and schedules that will be covered by the return preparer examination, but will not offer any preparation courses. Commercial businesses or individuals may offer preparation courses.

The IRS has proposed that Registered Tax Return Preparers will be required to complete continuing education annually. The annual continuing education requirement is expected to include 3 hours of federal tax law updates, 2 hours of ethics, and 10 hours of other federal tax law.

This will not apply to attorneys, CPAs, enrolled agents, enrolled actuaries, or enrolled retirement plan agents due to their existing education requirements.

The beginning date for continuing education has not been determined.

As part of the new oversight program, the IRS is revamping the continuing education approval process. Regulations issued in August 2010 outline the proposed modifications for providers of continuing education programs. Additional information will be available at a future date.

2. What is the process for becoming a qualified sponsor for continuing education? (revised 8/19/10)

Circular 230 section 10.6(g) outlines the current process. To qualify as a sponsor, a program presenter must:

• Be an accredited educational institution;

• Be recognized for continuing education purposes by the licensing body of any state, territory, or possession of the United States, including a Commonwealth, or the District of Columbia;

• Be recognized by the Director of Office of Professional Responsibility as a professional organization or society whose programs include offering continuing professional education opportunities; or

• File a sponsor agreement with the Director of the Office of Professional Responsibility and obtain approval of the program as a qualified continuing education program (Form 8498, Program Sponsor Agreement for Continuing Education for Enrolled Agents).

3. Attorneys and certified public accountants in some states are not subject to continuing education requirements. Will this impact the application of the proposed IRS rules for those individuals? (posted 1/22/10)

No. The lack of continuing education requirements for attorneys or certified public accountants in a specific state will not impact the exception. All attorneys and certified public accountants will be exempt from IRS CE requirements.

However, as stated in the Return Preparer Review report, the IRS believes that all tax return preparers have an obligation to stay current on the tax laws and continuing education serves to help individuals remain current and to expand their knowledge within their field of expertise. Such courses are important to tax administration given the complexity of the tax laws and the frequent changes made to the Internal Revenue Code and the rules and regulations implemented to assist in the administration of the Code.

The IRS will consider requiring continuing professional education from additional individuals if data is collected in the future that identifies such a need. Additionally, the IRS plans to reach out to licensing authorities to encourage them to support annual continuing professional education that includes federal tax law topics and updates and ethics for those individuals who are licensed by them and who prepare federal tax returns.

At a minimum, it will include the preparers who have passed the competency exam. Other information about who would be included is not yet available. Stay tuned to the IRS.gov Tax Professionals page for information on this issue.

Page Last Reviewed or Updated: September 28, 2010