Registered Tax Preparer CPE Requirement Dropped for 2011

IRS Commissioner Doug Shulman, in an October 26 speech before the AICPA Fall Meeting in Washington, DC, announced that the IRS intends to waive the continuing education requirements for registered tax return preparers during the first registration cycle (2011).

The proposed changes to Circular 230 established an annual 15-hour continuing education requirement for registered tax return preparers to renew their registration.  The 15-hour requirement was made up of 2 hours of ethics, 3 hours of Federal tax update and 10 hours of Federal Tax studies.  The 15-hour requirement did not apply to CPAs, EAs and attorneys since they already have to meet a more stringent continuing education requirement.     

The IRS has long required providers of continuing education courses for Enrolled Agents (EAs) to be approved by Office of Professional Responsibility (OPR).  In the proposed changes to Circular 230, the IRS has included a new requirement for OPR to approve each individual continuing education course and assign a unique number to each course.  Comments submitted to the IRS related to this proposal by several professional organizations and commercial CE providers pointed out some major problems associated with the task of approving individual courses.  With estimates of providers exceeding 2,000 and each with multiple courses, the question arises how the IRS will be able to timely approve that sheer volume of courses.

The National Association of State Boards of Accountancy (NASBA), the primary overseer of CPA CE, approves providers, not individual courses, although they have significant rules in place to insure quality programs.  Likewise, the California Tax Education Council (CTEC), which runs the California tax preparer program, also approves providers, although they do require each provider to submit a single course for review.  The AICPA recently suggested that the IRS exempt NASBA-approved providers from the course review requirement.  Needless to say, the IRS is going to need more time to develop registered tax preparer CE requirements.

The following excerpt is the text of Schulman’s speech related to several PTIN registration issues, including who is required to be registered, the CE issues, and the testing requirements:

There are a number of transition issues we are also working through as we implement the return preparer initiative. One of the first out of the gate was foreign PTINs for those paid return preparers outside of the United States who lack a Social Security Number, but prepare U.S. tax returns for their clients. We recognized the hurdles they faced, and in response, are providing them with some needed flexibility.

We are also still refining our rules for people who work in a professional firm, like an accounting firm, who prepare all, or substantially all of a return under the supervision of an accountant, enrolled agent or lawyer. While this is a tricky area, and I can't give you definitive guidance until we publish our final guidance later this year, I will tell you that I am sympathetic to the argument that the rules should be flexible for people who have met a higher professional standard. Therefore, it is highly likely that as we implement the new rules and procedures, there will be some relief for testing and continuing education requirements for people who do not sign a return and work in a professional firm under the supervision of an accountant, enrolled agent or lawyer.

We are also still working on a start date for testing, and an effective date for the 15 hours of continuing education. Some of those commenting encouraged us to slow down or delay these important parts of the program. While we are moving forward to put in place continuing education, we recognize the need for a staged transition to reduce burden and uncertainty. Therefore, during the first year of implementation, we intend to waive the requirement for continuing education. This will give us time to work through the many issues regarding CE, including working with third parties who already certify CE courses to attempt to leverage their infrastructure.

Finally, with any major initiative, I need to look at the people and structure that we will use to implement it. I am pleased to announce today that we are creating a Return Preparer Office inside of the IRS that will be led by David R. Williams, who is familiar to many of you for his work on the return preparer initiative. He will report directly to Steve Miller, Deputy Commissioner for Services and Enforcement.

This new office will have broad responsibility for the return preparer initiative. It will manage all of our activities related to continuing education and testing of all professionals under IRS jurisdiction. It will also manage the registration system and process, as well as coordinate resource planning for IRS efforts across the organization related to return preparers. If you have any insights, concerns and suggestions as we proceed on implementing the return preparer initiative, please feel free to contact David.

David's leadership on the return preparer initiative will complement the excellent work Karen Hawkins is carrying out as Director of the Office of Professional Responsibility. This critical organization will remain a separate entity within the IRS, and I see its impact being enhanced in the future to ensure that tax professionals meet the high ethical standards that taxpayers expect, need and deserve.

Indeed, it is my intention to provide Karen and her able team increased resources to investigate additional cases of improper conduct, ethical violations and other disciplinary issues involving tax professionals falling under Treasury Circular 230. I think it's fair to say that we could see an appreciable jump in the OPR case load in the foreseeable future as we work to ensure that all return preparers are serving the American people well.

The new tax preparer (PTIN) registration program is a work-in-progress.  Watch for further developments as the program is refined and the kinks are worked out.

  • 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.

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