Return Preparer Oversight and Circular 230 Update

1. Return Preparer Oversight and Circular 230 Update

2. IRS Office of Return Preparer Oversight • Who's manning the Office? • What do they do? • What about OPR?

3. Who's Manning the Office? • Director - David R. Williams • Deputy Director - Preston Benoit • Enrolled Agent Liason/Overseer - ???

4. What do They Do? • Responsible for RTRP program • PTIN's • Testing • Background and Compliance checks • CPE compliance • Legacy 230 Preparers • PTIN's • ???

5. What About OPR? • Circular 230 compliance and complaints - practitioner conduct • Disciplinary actions and hearing process for protests/appeals • What's not part of RPO

6. A PTIN, a PTIN, Wherefore art thou PTIN? • 800,000 - 1.2 Million Paid Preparers Estimated • About 717,000 PTIN's have been issued • Short issuing 1,000's of PTIN's but not 100,000's • PTIN's are Valid thru Calendar Year End • All Form 1040 Tax Return Preparers must renew annually

7. A Test Upon Both Your Houses • RTRP will have their own test • No test for Business Returns - 1065 and 1120 • NAEA still pushing for second test

8. The RTRP Test • Will be a new test, not Part I of the SEE • Will be for minimum competency • Explain Why AMT was calculated • Public was asked for input on test • Will be available starting this fall, perhaps October • Must be passed by Dec. 31, 2013 to sign returns

9. No Business Returns Test • Over 90 percent of all tax returns are form 1040's • Oversight happening in stages • Currently no data suggests a problem with Business Returns

10. NAEA is not Satisfied • NAEA is promoting a 2 tier approach for RTRP's • Still thinks testing should take place for Business Returns

11. Other RTRP Information and Requirements • Must pass compliance and background checks, including fingerprinting, starting approximately October, 2011 • Must take 15 hours of CPE annually consisting of • 3 hours of federal tax updates • 2 hours of ethics • 10 hours of federal tax law (preparer's discretion)

12. More RTRP Info • Non-signers working for and supervised by a Legacy 230 preparer will not be subject to passing the test or annual CPE requirements • Must Comply with Circular 230

13. Other IRS Information • IRS will use PTIN's to help them develop a searchable database of return preparers for public use • Public will be able to see credentials of return preparers • IRS will support EA branding as highly qualified tax professionals • Stated it is committed to promoting the designation of enrolled agent

14. More IRS Info • IRS would like eventually to use PTIN to have CPE reported to RPO office in "real time" • IRS would like to get to real time reporting of W-2 and 1099 information • No more CP2000's?

15. Circular 230 • New page - 31 U.S.C. §330. Practice before the Department • Adding RTRP throughout document - effective 8/2/2011 • References to OPR changed to IRS in most of document • §10.1 Offices - adding "and any other office(s) within the Internal Revenue Service necessary to administer and enforce this part."

16. Definitions • Enrolled Agent definition not changed • Neither was attorney or CPA • Definition of RTRP in §10.3(f)

17. RTRP Practice Defined §10.3(f) • (1) not currently under suspension or disbarment from Practice before IRS • (2) limited to preparing and signing tax returns • (3) may represent taxpayers before revenue agents, customer service reps, or similar employees of IRS during an examination if RTRP signed return

18. RTRP Continued • (4) if practicing under paragraph (f)(1), subject to provisions same as attorneys, CPA's and enrolled agents • §10.4 - adds RTRP to heading with enrolled agent and enrolled retirement plan agent • (c) curious language? • (d) Former IRS employees not given RTRP status

19. Application to become EA, RTRP §10.5 • (a) - (c) no real changes • (d) Compliance and suitability checks added • (d) Temporary recognition becomes (e) • (e) Appeal from denial of application becomes (f)

20. Term and renewal of Status §10.6 • (b) RTRP added to card or certificate paragraph • (c) Change of address added 60 day notice requirement and also states the most recent enrollment application or renewal will be the address of record for circular 230 purposes if no notification is sent • (d) Renewals information split up for specific dcesignation

21. More §10.6 • (e) Condition for renewal and (f) Qualifying continuing education - RTRP added • (f) Qualifying continuing education removed (1)(C) qualifying sponsor • (f)(2)(iii)(C) Maximum CPE for instructors/presenters limited to 4 hours for RTRP's or 6 hours for EA's per year - was 50 percent of annual requirement • (f)(2)(iv) CPE credit for writing articles, books, etc. has been removed.

22. CPE Continued • (f)(3) Periodic examination limited to EA's and ERPA's • Sponsors section (g) removed and reworked as new §10.9 Continuing education providers

23. Even More CPE • (i) now (h)(1) Recordkeeping for CPE changed from 3 years following renewal date to 4 years • (j) now (i)(5) Added protest rights if request for waiver of CPE requirements is not granted

24. Other Changes • §10.7 Representing Oneself (c) Limited practice, (1)(viii) removed, now RTRP • (e) Preparing tax returns and furnishing information moved to §10.8 • Must be less than substantially all

25. Other Continued • §10.8 Customhouse brokers changed to Return preparation and application of rules to other individuals • (a) Paid preparers must have PTIN • (a) Must be attorney, CPA, EA or RTRP to obtain PTIN unless prescribed by form, instructions, etc. • (c) Other individuals - subject to subparts B and C of Circular 230