Are You Ready to Start Cramming For PTIN Tax Finals?

Are You Ready to Start Cramming For PTIN Tax Finals?

Yes, it’s time to go back to school.A� As most tax preparers are aware, the new registration & PTIN requirements also include what the IRS is terming its “Phase 2: IRS Competency Exam.” As preparers begin to look into what new continuing education tax course will cover this, it is important that they understand the basics of how this new regulation will be implemented.A� This new information will not only ensure that enrolled agents meet EA CPE requirements and thereby retain their EA certification. It is an important part of their preparation as tax professionals that should help them avoid those caffeine-induced cram sessions reminiscent of their college days.

Below are some critical components of what’s required, and what’s not, along with what we know so far about the exams.

The second phase of the paid preparer oversight program is scheduled to start sometime in mid-2011. The IRS is stating that tax professionals must pass an exam to demonstrate a high level of competency in the preparation of federal tax returns. Once enrolled agents, certified public accounts and others pass the exam, they will officially be designated an IRS Registered Tax Return Preparer.


Luckily for some, there are several exceptions.A� According to the IRS, the following individuals will be exempt from testing:

enrolled agents, attorneys, and CPAs already active and in good standing with their licensing agency

supervised preparers (those who do not sign returns but are employed by attorney or CPA firms or other recognized firms at least 80 percent owned by CPA’s, enrolled agents or attorneys, and who are directly supervised by any of the above)

professional who prepare no Form 1040 series returns

What Will be Covered on the Exam?

The IRS has created two levels of competency exams.

The first exam will cover: Form 1040 wage and non-business income earned income tax credit. The second exam will cover: Form 1040 wage and small business income, including Form 1040 Schedules C, E and F and various other 1040 related forms.

Tax Continuing Education

Fortunately, tax continuing education is keeping pace.A� Because the IRS has continued to release details on the these new educational requirements, most EA CPE and Tax CPE providers are preparing to assist those who are now required to take these exams as early as mid-2011.A� It is also anticipated that most continuing education enrolled agents courses will start to offer separate sample exams and unique curriculum to help tax preparers falling into this bracket.

Silver Lining

Believe it or not, there is some good news for those who always dreaded exam day.A� As part of the recently announced regulations, the IRS has noted that the exams will be “Open-book.”A� According to David Williams, IRS Director of Electronic Tax Administration, the stated goal is minimal competency.A� “The test is designed to ensure that tax preparers can explain how the taxpayer’s position came about,” Williams stated.


Though the IRS expects to have the exam available by mid-2011, tax preparers will have until the end of 2013 to take and pass the exam if they register and get the new PTIN before the competency exam is available. Professionals delayed in getting the PTIN until after the online exam is available must pass the exam before they can get a PTIN and begin preparing returns. It goes without saying that this 2013 deadline is incentive enough for registering to get a PTIN early this year.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.