Beginning January 1, 2011, all paid tax preparers must register with IRS, pay a fee and receive a PTIN.

Beginning in the Fall of 2011, IRS will begin to administer competency exams. 

Beginning in 2012, all paid preparers will be required to complete continuing education courses on an annual basis.

Historically, only two states, Oregon and California have regulated the tax preparation industry. In August, 2008 the General Accounting Office released a report "TAX PREPARERS - Oregon’s Regulatory Regime May Lead to Improved Federal Tax Return Accuracy and Provides a Possible Model for National Regulation".  In 2009, the IRS launched a series of nationwide forums to gather input from tax industry professionals and the public at large as it worked to design a system for regulating the industry. 

The IRS released its report "Internal Revenue Service Return Preparer Review" on January 4, 2010.  Based on the results of the Return Preparer Review, the IRS recommends a number of steps that it plans to implement for future filing seasons, including:

1. Preparer Registration

Beginning January 2011, all paid tax return preparers who sign a federal tax return must register with the IRS and obtain a preparer tax identification number (PTIN).  As a part of the registration process, preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid.

2. Competency Exams

All paid tax return preparers must pass IRS competency exams by 2014.  There is an exception only for attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.

3. Continuing Professional Education

All paid preparers will be required to obtain ongoing 15 hours of continuing professional education each year.  The education must be obtained from an IRS approved sponsor and include 10 hours of federal law, 2 hours of ethics and 3 hours of tax law updates.   The continuing education requirements apply to all paid tax return preparers except attorneys, CPAs, enrolled agents.

4. Expansion of Ethics Rules Contained in Treasury Department Circular 230

Extending the ethical rules found in Treasury Department Circular 230 -- which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS -- to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct.

5. Other measures the IRS anticipates taking are highlighted in the 55-page report released January 4, 2010.

September 2010 - Implementation of NEW Tax Preparer Identification Number (PTIN) system

ALL tax return preparers including attorneys, CPAs, enrolled agents and unenrolled tax preparers must apply for or re-register existing PTINs prior to the 2010 filing season. PTINs must be renewed annually.  Tax preparers who are not CPAs, Enrolled Agents, or attorneys, will be issued provisional PTINs until they have successfully passed IRS background checks and passed the IRS comptency exam.

Fall -2011 - Implementation of competency testing procedures for tax preparers

All tax preparers who are not attorneys, CPAs or enrolled agents who apply for a PTIN after implementation of new competency testing procedures will be required to pass a competency exam prior to being issued a PTIN.

All tax preparers who are not attorneys, CPAs or enrolled agents who are issued PTINs prior to implementation of the new competency testing procedures must pass a competency exam prior to renewal of their PTIN.  This implementation process means existing tax preparers who register for a PTIN prior to IRS implementation of testing procedures will have until the end of 2013 to pass the new IRS competency exams.

2012 - Implementation of continuing education requirements