The IRS has begun providing test results to applicants who have taken the new return preparer competency test, which has been available since November 2011 (IRS News Release IR-2012-32). Individuals who pass the test and a follow-up tax compliance check, which should be complete within two weeks after the test results are issued, will be mailed a certificate with the designation Registered Tax Return Preparer (RTRP). Only those tax preparers that have received the certificate may hold themselves out to the public as Registered Tax Return Preparers.
The “calibration phase” has now ended for validating the test questions and setting a passing score, according to the IRS. The test of 120 questions, carries a perfect score of 500, which requires a score of 350 or higher for a passing grade. An IRS spokesperson told CCH that statistics on a pass-fail rate were not available at this time.
Preparers who have a provisional Preparer Tax Identification Number (PTIN) have until December 31, 2013, to take and pass the RTRP competency test, but the 15-hour annual continuing education requirement is effective in calendar year 2012. CPAs, attorneys, and enrolled agents are exempt from these particular continuing education and testing requirements, since they are subject to separate requirements. Non-signing preparers supervised by CPAs, attorneys, and enrolled agents are also exempt under current requirements, as are those who do not prepare Form 1040-series returns.
On March 13, a non-profit group filed suit in federal district court challenging the authority of the IRS to license tax return preparers. According to the complaint, the RTRP designation exceeds the IRS’s authority.
The IRS reminds everyone that the requirements to become an Enrolled Agent remain unchanged. Enrolled Agents must pass a three-part IRS exam (the Special Enrollment Examination) covering individual, business, and representation standards and rules, as well as, complete 72 hours of continuing professional education every three years.