The Internal Revenue Service urges 1,141 Hawai'i tax return preparers to immediately schedule their competency test or risk difficulty finding a date, time or location as the exam deadline nears next year. For most of these, the appropriate test will be the Registered Tax Return Preparer competency test.
The Registered Tax Return Preparer test has been available since November 2011. Nationwide, more than 310,000 tax return preparers still need to pass the test before Dec. 31, 2013. Tax professionals who are enrolled agents, certified public accountants, and attorneys are exempt from the test, as are certain non-signing preparers and those who do not prepare the Form 1040 series.
The RTRP test is being administered by Prometric Inc., which has 260 testing sites nationwide. However, if too many preparers delay, available seats will be scarce. To learn more about the test or to begin the scheduling process, preparers should go to www.irs.gov/Tax-Professionals/IRS-Test-Requirements-for-Becoming-a-Paid-Tax-Professional.
The test is one phase of a multi-year effort by the IRS to increase oversight of the tax professional industry and help ensure minimal competency levels among those who are paid tax return preparers. More than 60 percent of taxpayers use a tax preparer. Under the new rules, all professional tax return preparers must register with the IRS, obtain a Preparer Tax Identification Number (PTIN), and adhere to ethical standards.
Certain preparers must also pass the new test and complete 15 hours of continuing education each year. For these preparers, the IRS created a new credential: Registered Tax Return Preparer. Starting Jan. 1, 2014, only registered tax return preparers, enrolled agents, CPAs and attorneys will be authorized to prepare and sign individual tax returns.
Next year, the IRS will launch a public listing for taxpayers and others to confirm preparers with professional credentials and valid PTINs.
There are 3,093 return preparers from Hawai'i who have obtained PTINS from the IRS. Of those, 1,141 must still pass the competency test. For most of these, the appropriate test will be the RTRP test. More than 91 Hawai'i preparers already have taken the RTRP test and become registered tax return preparers.
The two-and-a-half-hour, timed exam must be taken at a Prometric site for control purposes. There are 120 questions which cover Form 1040 tax preparation issues, individual tax law issues and ethics. Preparers must pay $116 fee for the exam. CPAs, EAs and attorneys already must pass tests for their credentials.