New Tax Preparer Regulations

As part of a widespread initiative to better regulate the preparation of federal tax returns, the IRS has introduced new requirements for those who prepare tax returns for compensation.  Beginning in January 2011, any person who prepares the majority of a tax return for another person in return for payment must apply online with the IRS for a Preparer Tax Identification Number (PTIN).  Additionally, some individuals will be expected to receive continuing education credits and undergo testing, as required by amendments made to Circular 230:].

IRS Commissioner Doug Shulman discussed the benefits of the program by saying, “This is an important first step because it lays the groundwork in our efforts to ensure the quality and integrity of professional tax return preparation, which most taxpayers rely on in one form or another.”  However, the proposed regulations will not be free.  The initial fee for the PTIN application process is set at a yearly amount of $64.25 ($14.25 of which is for system upkeep and customer service), though this number may change in future years as the cost of the program is assessed.  In addition, the proposed amendments to Circular 230 concerning continuing education will place a fairly substantial burden on continuing education providers, a burden which may well transfer to CE students:

“Approximately 500 continuing education providers are currently approved to provide continuing education programs for the approximately 50,000 enrolled agents, enrolled actuaries and enrolled retirement plan agents who must complete continuing education currently, but the IRS and the Treasury Department estimate that there are 2,250 continuing education providers who will be affected by these record keeping requirements and the estimated annual burden per continuing education provider will vary from 5 hours to 5,000 hours, depending on individual circumstances, with an estimated average of 500 hours.  The estimated total annual costs resulting from these requirements will be $38,632,500 for all affected continuing education providers.  That works out to about $17,170 annually per CE provider” (

You can read the full text of the proposed regulations (REG-138637) here:  If you have comments or critiques about the program, you have until October 7, 2010 to present them to the IRS.

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