As most tax preparers know these days, it's important to be considered a competent tax return preparer. Registering for and obtaining a PTIN number helps clients select your tax return preparation services over others.
According to IRS, here's what you need to know about the PTIN and obtaining, then maintaining, competency in the field:
- The preparer should pass competency exams. IRS provides a study kit in order to become an Enrolled Agent (EA), along with the content the competent tax preparer professional should understand (such as tax forms used) without supplying the proposed PTIN user with many specifics. See Publication 4832, and (according to tax gurus) review pages 30 to 55, and Circular 230, with care.
- IRS says that tax return preparers should be knowledgeable in tax law. That's a tall order, though most tax preparers are conversant in the basics of tax laws. The focus remains on ensuring that deductions, expenses, and credits allowable under the current IRS code are properly presented.
- Competent tax return preparers must perform a certain level of "due diligence" by understanding the law(s) about income, expenses or deductions. Refer to Regulation §1.6109-2 for more information about the basics of federal tax compliance check. Tax professionals comment that IRS materials aren't considered authoritative references. Competent tax return preparers must seek out and understand the laws relating to their specialization.
- Tax attorneys and CPAs aren't required to take the competent tax preparer tests or enroll in yearly continuing education classes (15 hours per year for most PTIN users). These professionals are already under the regulatory supervision of the IRS and state governments. The IRS provides online information about the tax preparers tests. Because CPAs and some attorneys aren't de facto tax specialists, some PTIN holders believe the testing standards are biased.
The IRS will continue to refine the standards of competent tax return preparation in the years to come. As always, knowing where to go for challenging tax research questions, maintaining high standards in the practice, and creating solid relationships with other specialists in the field help you succeed!