The IRS Tax Certification Test

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by: JonHarwokey
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Date: Tue, 9 Feb 2010 Time: 11:10 AM
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When it comes to the IRS, things can get confusing, muddled, and even frustrating. Clearly, when it comes to your money, your life, and your income, it's no surprise that things can get a bit sensitive. For accountants and tax prep professionals, the need for up-to-the minute information and in-depth knowledge is essential. One important fact regarding this year's income tax return policies is a change in the registration policies for paid tax preparers. It's called the IRS tax certification test.

1. What is the new requirement?
The new requirement, in essence, has to do with tax preparer's need to register with the IRS. Before, paid preparers were able to prepare tax returns with no need for registration. Now, there are two steps that the preparer must go through in order to be legally prepared to file tax returns for others.

First, under the IRS tax certification test policies, the tax return preparer must obtain a preparer tax identification number (PTIN) from the IRS. The IRS will perform a brief compliance check of the preparer, simply to make sure that he or she has a history of competency in tax returns.

Following registration, the IRS requires a competency test for all tax return preparers. Only CPAs, enrolled IRS agents, and attorneys - all of whom are in current standing with their respective licensing boards - are exempt from the IRS tax certification test.

Finally, the new policy does not stop with just an IRS tax certification test. It also requires ongoing education for tax preparers. The goal of the IRS tax certification test and continuing education is higher standards, increased accuracy, and a greater confidence level among taxpayers that their tax preparer is adequately equipped to file taxes.

2. When did it pass? When will it go into effect?
In the summer of 2009, the discussion got started. Doug Shulman, IRS commissioner, saw a need for higher standards. As more and more Americans turned for professional help on their taxes, the fear was that the increased demand would result in a lowering of the competency level of tax prepares. Shulman proposed a comprehensive review and careful investigation. By the end of 2009, the new program was ready for launch. Now in 2010, the new IRS tax certification test has officially launched. The policy change occurred on January 4, 2010. Now, all paid tax preparers are required to take the IRS tax certification test. The test is available online (http://www.irs.gov/app/vita/index.html) as is all relevant information, including the Return Preparer Review document. (http://www.irs.gov/newsroom/article/0,,id=217811,00.html?portlet=6).

3. What type of certification is required and for whom?
The IRS tax certification test is now an official government requirement for anyone who prepares IRS tax returns for pay. The only exemptions, as mentioned above, apply to those are CPAs, IRS agents, licensed actuaries, licensed retirement agents, and certified attorneys.

Certification is not difficult to obtain, but does require the successful passing of a basic test which is found online. Following the test, the IRS tax certification test policy requires continuing education, consisting of 15 hours of relevant education. Self-certification, using the IRS's online system, is available for paid tax preparers to register fulfillment of their continuing education requirements.

Though the new policies come as somewhat of a surprise and a potential interruption to one's profession and livelihood, they do guarantee a certain level of accountability both to the IRS and to the Americans who paid preparers service. In our current climate of financial instability, any measure of safeguarding and increase of standards can be welcomed and appreciated.

About the Author

Jon Harwokey works for a startup company in several areas including the tax and finance dept. ExamMatrix is offering a review course for the IRS Certification Test that is mandatory for all tax preparers who receive a fee for completing a tax return. ExamMatrix, creator of the first computer based CPA Exam Review, guarantees you will pass if you use one of their powerful review software courses.