Is Your Tax Preparer Really Legal?

By Barbara Zimmer
Most people are unaware that in September 2010 the IRS issued new regulations related to all paid tax preparers. These new regulations will go into effect on January 1, 2011, and they will affect every single paid tax preparer in the United States, and everyone who uses their services.
Effective January 1, 2011, every paid preparer must register with the IRS and pay an annual fee. Effective Mid 2011, the second phase of this oversight program kicks in and every preparer must pass a competency exam and comply with continuing education requirements before they will be able to renew or be issued a PTIN. Without this number, a paid preparer will be in violation of federal law.
Why has the IRS issued these new requirements? Well, according to the IRS, because “taxpayers need and deserve tax preparers who are ethical, fully qualified, and able to provide the best possible service.” The PTIN is required for paid preparers, attorneys, CPAs, enrolled agents, enrolled actuaries, etc. Many of these professions have exams and CPE requirements in place and, therefore, merely had to apply and pay the fees. The greatest impact will be on those paid preparers who do not hold these credentials.
With the complexity of current tax laws, such requirements make perfect sense. A qualified professional in most cases costs no more than an unqualified preparer. Should your return be selected for an audit, only a qualified professional will be able to represent you before the IRS (IRS Circular No.230).
The IRS will be creating a searchable data base of all licensed tax preparers, but the date this tool will be available has not yet been released.
For more information on the new preparer requirements, please go to www.IRS.gov and look for New Return Preparer Regulations.
Ms. Zimmer is a Maryland licensed CPA practicing in Anne Arundel County.