IRS Proposal for Preparer Tax Identification Number Requirement

In March 2010, the Internal Revenue Service (IRS) requested comments on proposed regulation regarding assigning unique identifying numbers to tax return preparers. In the proposal, the IRS indicated that requiring all paid tax return preparers to register and receive a preparer tax identification number (PTIN) is necessary to allow the IRS to identify tax return preparers and track the tax returns and refund claims associated with them.

On April 26, 2010, CFP Board submitted a comment letter (missing PDF) supporting the IRS’s efforts to register all paid tax return preparers, given taxpayers’ increased reliance on paid tax return preparers and the important public policy concern for ensuring consumers have access to competent and ethical tax return preparers, but raising specific concerns about the proposed regulation and the related competency testing and continuing professional education (CPE) requirements that the IRS acknowledged as forthcoming. In the letter, CFP Board encouraged the IRS to consider providing CFP® professionals with the same exceptions to competency testing and CPE requirements the proposal affords to attorneys, CPAs, and enrolled agents, citing the rigorous testing and CPE requirements already part of the CFP® certification requirements.

In an August 2010 comment letter, CFP Board provided comments on the proposed regulations regarding the imposition of user fees for individuals who apply for or renew a preparer tax identification number (PTIN). CFP Board stated its support for the requirement that all tax return preparers obtain a PTIN and its belief that the $50 annual user fee recommended in the proposed regulations is fair based on the cost to the IRS, the value derived by tax return preparers from preparing tax returns, and the public policy benefits that will accrue from enhanced oversight of tax return preparers.

In an October letter, CFP Board provided the IRS with comments on proposed modifications to regulations governing practice before the IRS. CFP Board applauded the IRS proposal to hold all tax return preparers meet strict ethical guidelines and suggested that the IRS should tailor the continuing education requirements to ensure competency of registered tax return preparers while providing flexibility in meeting those requirements. Finally, CFP Board urged the IRS to exempt CERTIFIED FINANCIAL PLANNER™ professionals from the competency testing and continuing education requirements established for registered tax return preparers, given the substantial income tax-related education and examination required to attain and maintain CFP® certification.

In a July 2011 comment letter (Missing PDF), CFP Board responded to an IRS request for comments concerning the content and administration of the competency examination for registered tax return preparers, sharing guidance from CFP Board's long history of developing successful competency examinations and enforcement mechanisms for the CFP® certification. CFP Board also raised concerns about an exemption from the competency testing and continuing education requirements the IRS has provided to individuals who prepare all or substantially all of a tax return under the supervision of an attorney, CPA or enrolled agent. CFP Board noted that exemptions for non-professionals who have not demonstrated the necessary competency to prepare tax returns appears inconsistent with the IRS's reluctance to exempt CFP® professionals, whose professional standards meet or exceed those held by attorneys, CPAs, and enrolled agents.