Dealing With Conflicting CE Reporting Periods For CTEC and The IRS
With the advent of the IRS Registered Tax Preparer Program, California Registered Tax Preparers (CRTPs) are faced with dual continuing education (CE) requirements to annually renew their registration with the IRS and CTEC. To make matters more complicated, the CTEC CE reporting period is November 1 to October 31 while the IRS reporting period is a calendar year--January 1 through December 31.
On top of that, 2012 is a transition year for CTEC education requirements because CTEC conformed to the IRS education requirements effective January 1, 2012 but will continue to honor the education under the prior CTEC requirements taken during November and December for their 2012 renewal requirements.
This report will address these and other issues faced by CRTPs in meeting their CE requirement for registration renewal in 2012.
Conflicting Reporting (Registration) Periods – Probably the greatest challenge CRTPs face is dealing with the mismatched CE reporting years. CRTPs need to meet their CE requirements for the CTEC November through October reporting year and the IRS January through December reporting year. This can introduce some complications because the prime education period, November through December, falls during different reporting periods for CTEC and the IRS. The November through December period occurs when the traditional fall update programs are presented to update the CRTPs regarding law and procedural changes in preparation for the upcoming tax season. The figure below illustrates the conflict in CE reporting.
This conflict is easily overcome by applying the education completed from November to December to the IRS requirement for the “current” IRS reporting year and for the CTEC requirement for the “subsequent” CTEC reporting year. If all gain or loss realized on such disposition is recognized CRTPs who historically attend fall update and review seminars—which they should to prepare for tax season—can continue reporting in this manner year after year.
Example: Robert, a CRTP, attended the ClientWhys Fall Update and Review Seminar in November of 2012 and again in November of 2013. Robert would apply the CE credits earned for attending the seminar in 2012 to his CTEC renewal in 2013 and to his IRS renewal in 2012. His November 2013 credits would apply to his 2013 IRS registration and his 2014 CTEC registration.
Thus, CRTPs must be careful when allocating and tracking CE credits. Click here for a form designed by ClientWhys to assist CRTPs tracking their CE credit and applying them properly between the IRS and CTEC education requirements.
Transition CE - CTEC conformed to the IRS continuing education requirements effective on January 1, 2012 that require 2 hours of ethics or professional conduct, 3 hours of federal update, and 10 hours of federal tax subjects. To that, CTEC added 5 hours of California tax education for a total of 20 hours.
However, the CTEC reporting year began on November 1, 2011. During the period November 1 through December 31, 2011, the CTEC education requirement was also 20 hours, but the allocation was different. During those two months, the allocation was 2 hours of ethics, 12 hours of federal tax subjects, 4 hours of California tax, and 2 additional hours in either federal or CA tax.
For those that completed their CE requirements before the end of the year, CTEC will accept the old CE credit allocation for the 2012 registration.
Dual Approved Providers - A new wrinkle for CTRPs is that for CE to be acceptable for CTEC credit, the education provider must be an approved provider by both the IRS and CTEC. Now that the IRS has annual CE requirements, more providers across the nation will enter that market, and although they may be approved to provide IRS CE credits, they cannot issue CTEC credits without first becoming an approved CTEC provider. So it is incumbent upon CRTPs to exercise caution in selecting education programs only offered by providers that are approved by both CTEC and the IRS.
Example: Robert, our CRTP, sees an ad for an IRS approved federal tax subject being presented in Las Vegas by an IRS approved provider but not a CTEC approved provider. Wanting to put together a trip to Vegas with for his education needs, Robert attends the Las Vegas seminar and is awarded CE credits. Those credits can be used to meet Robert's IRS education requirements to renew his PTIN, but they will not count towards Robert's CTEC education requirements because the provider was not CTEC approved.
Example: Same scenario as above, except Robert attends a seminar conducted by the IRS. The IRS is by default an approved CTEC provider, so Robert’s credits will count towards both his IRS and CTEC education requirements. However, take note of the “provider reporting requirements” below.
Provider Reporting Requirements - With the exception of the IRS, FTB, and BOE, who are default approved CTEC providers, all providers are required to report CE to CTEC where it can be verified when the CRTP renews his or her registration. This permits expedited online renewals. However, at the present time, the IRS, FTB, and BOE are exempt from the CE reporting requirements. Thus, where education was taken from those three agencies, manual registration is required and verification of the CE must be submitted to CTEC.
IRS Publication Courses - The new IRS education standards have placed restrictions on the study material that can be used for self-study programs. IRS standard S8-07 requires that self-study programs be based on materials specifically developed for instructional use and not on third party materials. Self-study programs requiring only the reading of general professional literature, IRS publications, or reference manuals followed by a test are not acceptable. Not all providers have gotten the message, and some are still providing courses that are based on IRS Publication 17. CRTPs are cautioned to avoid such courses in case the CE is disallowed.
Late Registration - Beginning with 2012 registration, CTEC has extended the late registration until January 15 of the subsequent year and increased the late registration fee to $55 (it was $13 prior to 2012). A late registration is one that occurs after the October 31 registration deadline. If a late registering CRTP does not renew by the January 15 date, he or she will be treated as a new applicant and will be required to successfully complete the 60-hour qualifying education requirement for new CRTPs before registering.
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Lee Reams Sr.
Lee T. Reams is the Chief Technical Officer of ClientWhys. He is also an Enrolled Agent having managed a 600-plus client tax practice. Educated as an engineer, with a Bachelor's Degree in Mechanical Engineering, Lee left his engineering career in 1975 to expand his part-time tax practice into a full-time career.