Posted 11/18/11

COMPETENCY EXAM UPDATE,
IRS RELEASES WARNING LETTERS FOR TAX PREPARERS

The preparer competency exam is ready to go, according to the IRS. The IRS must publish regulations to implement the test in the Federal Register to get it officially started. Release of those rules could come within the next week. Prometric, the IRS's test vendor, will run statistics on the first 2,400 tests which will delay the results for those test takers. Mid-year 2012, Prometric expects to have mobile test sites available for preparers in remote locations. The test will NOT be available for two weeks annually: April 1 - April 15, while the test is updated to reflect new law. For example, after April 15, 2012, the test will be updated for 2011 tax law.

Release of PTIN Information

The IRS is looking into the Freedom of Information Act (FOIA) as it relates to the personal information on PTIN holders. The IRS has received several requests under FOIA for PTIN holder information. The IRS has responded to a few requests but put others on hold as it determines what is "confidential" information on a PTIN holder that should be excluded from public release.

Warning Letters to Preparers

Last week, the IRS sent 21,000 letters to preparers warning them of possible problems with their return filings. The letters were specifically targeted toward practitioners with a large number of individual returns with Schedules A, C, or E during the 2011 filing season. The tax return preparers receiving the letters prepared returns which the IRS determined had a high number of possible inaccuracies or misinterpretations of tax law. The letters include an enclosure that outlines common issues they should be aware of on the specific schedule. The letters also describe current responsibilities of tax return preparers, the consequences of filing incorrect returns, and new tax return preparer requirements. Approximately 2,100 of those preparers will be visited in person by the IRS.

Click here for a copy of the IRS letter.

Click her for a copy of the IRS FAQs on the IRS Letters and Visits to Preparers.