IRS Reports Delay In Processing Some EA Renewals; Updates RTRP Exam
The Internal Revenue Service today announced that it has begun providing test results to tax return preparers who have taken the new return preparer competency test. Those who pass the test and a tax compliance check will be given a new designation: Registered Tax Return Preparer.
Since the test became available in November 2011 it has been in a calibration phase as the IRS validated the test questions and set the passing score. This phase has now ended. The 120-question test has a perfect score of 500. Preparers must score 350 or higher to receive a passing grade.
All individuals who have taken the test to date were recently sent a letter from the IRS informing them whether they passed or failed. Those who pass the test must still pass a tax compliance check performed by the IRS, which will generally be completed within a couple of weeks after the test score is issued. Those individuals passing both the test and the tax compliance check will be sent a Registered Tax Return Preparer certificate. Only those tax return preparers who have received a Registered Tax Return Preparer certificate may call themselves Registered Tax Return Preparers.
The test is part of a larger IRS effort to ensure competency and professional standards in the tax preparation industry. All paid tax return preparers must obtain and annually renew a Preparer Tax Identification Number (PTIN). Certain return preparers must also complete 15 hours of continuing education annually, pass the one-time competency test by Dec. 31, 2013, and pass a tax compliance check.
Certified Public Accountants, attorneys and Enrolled Agents are exempt from the new continuing education and testing requirements because they already have separate requirements. Also exempt are non-signing preparers supervised by CPAs, attorneys or Enrolled Agents and those who do not prepare the Form 1040 series.
Although preparers have nearly two years to take the test, the IRS encourages them to complete the requirement as soon as they can.
Preparers with a testing requirement can schedule the test by accessing their PTIN account at IRS.gov/ptin. The test can be taken at more than 260 sites and the test fee is $116.
Preparers can find more details about the test at IRS.gov/taxpros/tests. There are helpful resources available such as a Candidate Information Bulletin, which provides a list of recommended study materials; a test demonstration; and a video of what to expect on test day.
Testing will be suspended for a two week period beginning April 1 and resume on April 16, 2012. Those taking the test on or after April 16th will receive immediate test results at the test center after completion of the test.
Special Enrollment Examination remains unchanged
More information on the Special Enrollment Examination and the Registered Tax Return Preparer Competency Test is available at www.IRS.gov/taxpros/tests.
Congress has extended the employee-side payroll tax cut through the end of 2012. After weeks of uncertainty over whether an agreement could be reached, the House passed the Middle Class Tax Relief and Job Creation Act of 2012 (H.R. 3630) by a vote of 293 to 132 on February 17, 2012. Senate approval quickly followed, also on February 17, by a vote of 60 to 36. Lawmakers agreed not to require the $93.2 billion estimated cost for the payroll tax cut extension to be offset by revenue-raising provisions. A potential impasse over revenue increases was avoided entirely when both parties agreed to offset costs of the full-year, two percentage point payroll tax cut through transfers from the general fund of the Treasury to the OASDI trust fund. In a revenue neutral provision, however, the new law eliminates a timing-shift in the estimated tax payments that had been required of certain large corporations under previous laws. Non-tax provisions within the new law extend unemployment benefits and implement a "doc fix" for Medicare. President Obama is expected to sign the bill as soon as it reaches the White House.
The Temporary Payroll Tax Cut Continuation Act of 2011 (2011 Payroll Continuation Act) had extended the employee-side payroll tax rate reduction of two percentage points through the end of February 2012. The new law extends the employee-side payroll tax holiday through the end of 2012.
Under the new law, individuals who receive wages and salaries will pay Old-Age, Survivors, and Disability Insurance (OASDI) taxes at a rate of 4.2 percent for calendar year 2012. The OASDI tax rate for selfemployed individuals for 2012 similarly has been extended at a reduced 10.4 percent level through the end of 2012.
OASDI. Individuals contribute to Social Security through payroll taxes (the Federal Insurance Contributions Act (FICA)) or self-employment taxes (Self-Employment Contributions Act (SECA)). Both FICA and SECA are composed of two parts: (1) the Old-Age, Survivors, and Disability Insurance (OASDI) tax and (2) the Medicare Hospital Insurance (HI) tax. The OASDI tax normally requires employers and employees each to pay 6.2 percent of wages up to the maximum taxable wage base ($110,100 for 2012). Self-employed individuals pay both portions (normally equal to 12.4 percent). The new law reduces those rates to 4.2 percent and 10.4 percent, respectively, for 2012.
When Congress passed the two-month extension of the payroll tax cut, the extension included a recapture provision, which was intended to apply to individuals who receive more than $18,350 in remuneration in January and February 2012. The recapture tax would have been payable in 2013 when the individual filed his or her income tax return for the 2012 tax year. The House Ways and Means Committee explained that the recapture provision would not apply when Congress approved a full-year extension of the payroll tax cut for 2012. The new law holds true to that promise by amending the definition of "Payroll Tax Holiday Period" in the 2010 Tax Relief Act to mean calendar years 2011 and 2012, and by repealing the January-February recapture provisions.
In a February 15, 2012 letter to the Joint Committee on Taxation, IRS Commissioner Douglas Shulman reported that the IRS had taken measure to prepare for the expiration of the two-month extension, including revising forms and instructions and programming systems. He further wrote that the IRS will be making "small modifications to certain notices to, and publications for, employers" but that no new guidance would be required and only minimal impact on IRS training and the Internal Revenue Manual would take place because of the full-year extension.
The employer's share of OASDI taxes is not reduced to 4.2 percent but remains at 6.2 percent for all of 2012. That 6.2 percent "half" of OASDI taxes on self-employment income is effectively built into the 10.4 percent rate for 2012.
House Republicans introduced the Payroll Tax Cut Continuation Act of 2012 as a stand-alone payroll tax cut bill without an extension of unemployment benefits and a Medicare "doc fix." Last-minute negotiations added an extension of unemployment benefits and the Medicare "doc fix" (as well as a name-change for the bill to the Middle Class Tax Relief and Job Creation Act of 2012).
The GOP dropped a proposal to require claimants for the earned income credit to have a Social Security number. Also dropped was a proposal to extend 100 percent bonus depreciation one more year, through 2012. The so-called "tax extenders" provisions were tabled. These include the research tax credit, the state and local sales tax deduction, the higher education tuition deduction, and many others.
Generally, a corporation is required to make quarterly estimated tax payments during its tax year based on its income tax liability. For a corporation whose tax year is a calendar year, these estimated tax payments must be made by April 15, June 15, September 15, and December 15. A fiscal year corporation pays estimated tax installments for a tax year on the 15th day of the fourth, sixth, ninth, and twelfth months of the year.
A number of recent laws have accelerated the estimated tax payment required to be made by certain large corporations (those with assets of at least $1 billion) from one quarter into the previous quarter. Congress had enacted these changes solely as accounting maneuvers designed to make certain budgetary requirements over shifting budget windows from one fiscal year to another. For example, such shifts were required under the trade agreements with Colombia, Korea and Panama enacted in 2011; the Hiring Incentives to Restore Employment Act of 2010; and the Corporate Estimated Tax Shift Act of 2009. Under this regime, the next required installment of estimated tax would be reduced accordingly to reflect the increase. None of these shifts has yet to take place.
The new law provides that these recently enacted timing shifts are repealed. The regular payment schedule that applied prior to the enactment of the timing shifts is restored.
AMT Patch. President Obama has proposed abolishing the AMT and recouping at least some of the lost revenue with the so-called Buffett Rule. Until (and if) Congress should enact the Buffett Rule, President Obama has proposed to provide for AMT patch for 2012 and subsequent years. The AMT patch provides taxpayers with increased exemption amounts.
Corporate Tax Reform. There is a growing groundswell among tax professionals that tax reform is necessary both to reduce complexity and streamline economic competitiveness. The administration is expected to unveil a "framework" for corporate tax reform later in February. Administration officials have said that the corporate tax rate could be reduced in exchange for the closing of unspecified tax loopholes. The framework could also include the President's proposed minimum tax on overseas profits, which like the Buffett Rule has not yet been described in detail by the administration.
Carried Interest. As part of his FY 2013 budget, President Obama proposed to designate a carried interest in an investment partnership as a services partnership interest (SPI). A partner's share of income from an SPI that is not attributable to invested capital would be taxed as ordinary income. Self-employment tax would attach to that income. The President's proposal has been described as a non-starter by the GOP.
Bonus Depreciation. One hundred percent bonus depreciation generally expired at the end of 2011. President Obama and many lawmakers support extending 100 percent bonus depreciation through the end of 2012.
Extenders. A host of temporary individual, business and energy tax incentives expired at the end of 2011. President Obama has indicated his support for extending the extenders as have many lawmakers. However, the cost of extending the expired provisions could be an obstacle to their passage.
Sunsetting of the Bush-Era Tax Cuts. President Obama and the GOP remain far apart over the fate of the Bush-era tax cuts. The President has frequently reiterated his proposal to allow the Bush-era tax cuts to expire for higher income taxpayers after 2012, most recently in his State of the Union address and FY 2013 budget proposals. Both sides expect little progress over the fate of the Bush-era tax cuts until after the November elections.
The IRS issued proposed regulations on Tuesday, February 17, regarding the availability of preparer tax identification numbers (PTINs) for supervised nonsigning preparers and for preparers of forms other than Form 1040. They also address what tax forms are considered returns for purposes of the PTIN rules (REG-124791-11). The proposed regulations do not introduce any new rules, but would formalize rules introduced by the IRS in Notice 2011-6.
While Regs. Sec. 1.6109-2(d) limits the tax return preparers who are eligible to obtain a PTIN (and thus prepare tax returns) to CPAs, attorneys, enrolled agents and registered tax return preparers, the proposed regulations carve out an exception for certain nonsigning preparers in certain circumstances. Specifically, the proposed regulations would allow “[a]n individual 18 years of age or older who is supervised, in the manner the Internal Revenue Service prescribes ... by an attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary” to obtain a PTIN (Prop. Regs. Sec. 1.6109-2(d)(2)(v)).
The preamble to the proposed regulations specifies that “in the manner the [IRS] prescribes” means in accordance with the rules set forth in Notice 2011-6. The requirements set out in the notice include:
The proposed regulations would also allow an individual who certifies that he or she prepares only “tax returns and claims for refund of tax that are not covered, at the time the tax return preparer applies for or renews the number, by a minimum competency examination prescribed by” the IRS to obtain a PTIN (Prop. Regs. Sec. 1.6109-2(d)(2)(vi)).
Again, the individual must comply with any requirements that the IRS prescribes, and the proposed regulations’ preamble says that the requirements are those in Notice 2011-6. Notice 2011-6 requires such individuals to certify that:
For purposes of the PTIN rules, the proposed regulations adopt a broad definition of tax return or claim for refund as “all tax forms submitted to the Internal Revenue Service unless specifically excluded by the Internal Revenue Service in other appropriate guidance” (Prop. Regs. Sec. 1.6109-2(a)(1)). The preamble affirms that the list of 28 excluded forms and series of forms in Notice 2011-6 is the current list.
The proposed regulations would apply to tax return preparers when they are finalized, but in the meantime the rules of Notice 2011-6 continue to apply.
The Internal Revenue Service is moving into the next phase of its effort to improve the tax preparation industry by launching the new Registered Tax Return Preparer competency test.
The new competency test is part of a larger initiative to increase oversight of the tax preparation industry. Last year, the IRS required all paid tax return preparers to obtain a Preparer Tax Identification Number (PTIN). Those tax return preparers who currently have a valid PTIN and are required to take the new test will have until Dec. 31, 2013, to pass it.
Preparers who pass the test and meet other requirements will be given a new designation: Registered Tax Return Preparer. In order to maintain that designation, the individuals must renew their PTINs annually and complete 15 hours of continuing education each year. Enrolled Agents, Certified Public Accountants, and attorneys, among others, are exempt from the new testing and education requirements. These professional groups already meet more stringent guidelines to obtain their professional credentials.
“This is another major step forward in our effort to enhance tax preparation service to millions of taxpayers. People should feel assured that the person they hire to prepare their federal tax returns has a working knowledge of the tax code,” said Doug Shulman, IRS Commissioner. “The majority of tax return preparers are reputable professionals but the few bad apples cause great harm to taxpayers and the industry.”
The fee for the competency test is $116, which includes the IRS portion of the fee and the fee for Prometric Inc., a third-party test vendor. The test covers preparation of the Form 1040 and its related schedules. Test scheduling begins next week. Initial test takers won’t receive their test scores for two to six weeks to allow the IRS to validate the exam and determine the pass/fail cutoff. Once validation is complete, around mid-January, those taking the computer-based test will receive their scores at the test center immediately upon completing the test.
Prometric will eventually administer the test at more than 260 centers nationally, but the test is not available at all locations currently. Test sites will be added daily and international locations may be added in the future.
Over 750,000 tax return preparers have obtained PTINs. The IRS estimates that approximately 350,000 people may be initially subject to the Registered Tax Return Preparer test requirement.
Fact Sheet 2011-12 provides additional details about the test, including which preparers are required to take it and how to schedule an appointment.
Work On Background Check Implementation Plans Continue
While the IRS continues to review the issues surrounding background checks, it will issue Registered Tax Return Preparer certificates to individuals who pass the Registered Tax Return Preparer test and a tax compliance check. Individuals issued Registered Tax Return Preparer certificates may begin using the Registered Tax Return Preparer designation, but they still may be subject to additional background checks that the IRS may implement in the future.
Special Enrollment Examination Remains Unchanged
The process for registering and taking the Special Enrollment Examination remains unchanged. More information on the Registered Tax Return Preparer Competency Examination and the Special Enrollment Examination is available at www.IRS.gov/taxpros/tests.
PTIN Renewal Season Reminder
The Internal Revenue Service today announced that the nation’s 738,000 tax return preparers who have Preparer Tax Identification Numbers (PTINs) can now renew their PTINs for the 2012 filing season.
Preparers are required to renew their PTINs on an annual basis and need to do so before the next year begins. For example, a preparer’s PTIN for 2012 must be renewed by Dec. 31, 2011.
Anyone who for compensation prepares, or helps prepare, all or substantially all of tax returns or claims for refunds must have a PTIN. Paid return preparers must have valid, current PTINs to prepare tax returns in 2012.
The PTIN renewal fee for 2012 is $63. The initial application fee for a PTIN remains at $64.25. Return preparers who obtained their PTINs by creating an online account should renew their PTINs at www.irs.gov/ptin.
Preparers who used paper applications to receive their 2011 PTINs will receive an activation code in the mail from the IRS which they can use to create an online account and convert to an electronic renewal for 2012. Individuals can also renew using a paper Form W-12, IRS Paid Preparer Tax Identification Number Application, but renewing electronically avoids a four to six week wait for processing the renewal request.
Return preparers who are applying for a PTIN for the first time must go through a strict authentication procedure and should follow directions carefully. Return preparers who prepared, or helped prepare, returns for compensation in 2011 without PTINs must obtain 2011 PTINs and then renew their PTINs for 2012, paying fees for each year if they intend to practice next year. Penalties may apply for paid tax return preparers who prepared, or helped prepare returns in 2011 without valid PTINs.
Some changes to the PTIN application and renewal process include:
Supervised preparers are individuals who don’t sign the returns they prepare or help prepare; work at a firm at least 80 percent owned by a Certified Public Accountant, an attorney or an Enrolled Agent; and prepare returns that are signed by a supervisor who is a CPA, attorney or Enrolled Agent.
Non-1040 preparers are people who do not prepare any individual income tax returns for compensation. For this purpose, preparers of Form 1040-PR and Form 1040-SS are considered non-1040 preparers.
Supervised preparers and non-1040 preparers must identify themselves when they apply for or renew their PTINs to be exempted from testing and continuing education requirements; Certified Public Accountants, attorneys and Enrolled Agents are also exempt from testing and continuing education requirements.
For more information on the PTIN requirements or on becoming a Registered Tax Return Preparer, go to www.rtrpassociation.org/newsletter.cfm.
The Internal Revenue Service announced on Thursday, October 6, 2011 that it is issuing proposed regulations that would require paid tax return preparers, beginning in 2012, to file a due diligence checklist, Form 8867, with any federal return claiming the Earned Income Tax Credit (EITC). It is the same form that is currently required to be completed and retained in a preparer’s records.
The due diligence requirement, enacted by Congress over a decade ago, was designed to reduce errors on returns claiming the EITC, most of which are prepared by tax professionals.
The IRS created Form 8867, Paid Preparer's Earned Income Credit Checklist, to help preparers meet the requirement by obtaining eligibility information from their clients. Preparers have been required to keep copies of the form, or comparable documentation, which is subject to review by the IRS. To help ensure compliance with the law and that eligible taxpayers receive the right credit amount, the proposed regulations would require preparers, effective Jan. 1, 2012, to file the Form 8867 with each return claiming the EITC.
Further details can be found in REG-140280-09. Comments on the proposed regulations are due by Nov. 10, 2011, and a public hearing on the proposed regulations is scheduled for Nov. 7, 2011.
The EITC benefits low-and moderate-income workers and working families and the tax benefit varies by income, family size and filing status. Unlike most deductions and credits, the EITC is refundable — taxpayers can get it even if they owe no tax. For 2011 tax returns, the maximum credit will be $5,751.
Although as many as one in five eligible taxpayers fail to claim the EITC, some of those who do claim it either compute it incorrectly or are ineligible. The IRS is proposing this step as part of its efforts to ensure that the credit is afforded to taxpayers who qualify. For 2009, over 26 million people received nearly $59 billion through the EITC. Tax professionals prepare close to 66 percent of these claims.
The IRS provided more details Wednesday of its still-developing requirements for all paid tax return preparers to be registered and undergo a background check, to include fingerprinting. The IRS said attorneys, CPAs, enrolled agents, enrolled retirement plan agents and enrolled actuaries are exempt from fingerprinting “at this time”. It also said it will not require individuals to be fingerprinted prior to obtaining a PTIN before April 18, 2012.
Preparers who are not attorneys, CPAs, enrolled agents, enrolled retirement plan agents, enrolled actuaries or other practitioners authorized to practice before the IRS under Circular 230 must also pass a competency test and fulfill continuing education requirements, unless they are nonsigning preparers supervised by a signing Circular 230 practitioner in a CPA or law firm or certain other recognized firms or they do not prepare Form 1040. The IRS designates non-Circular 230 preparers covered by the requirement generally as registered tax return preparers (RTRPs).
The new guidance includes Notice 2011-80 on obtaining and renewing preparer tax identification numbers (PTINs) and planned implementation of the testing and continuing education requirement. The IRS also released proposed regulations (REG-116284-11) concerning IRS user fees for the competency exam and fingerprinting. The testing fee would be $27 and the fingerprinting fee $33. Vendors would also tack on their own fee (the amount of which has not been announced). The IRS estimated in an accompanying news release (IR-2011-96) that fees would total between $100 and $125 for testing and $60 to $90 for fingerprinting. PTIN annual renewal already carries another fee, $64.25 for 2012.
The IRS has indicated previously that fingerprinting would be part of its “suitability check” for PTIN registration when fully implemented. In the news release, the IRS said that attorneys, CPAs, enrolled agents, enrolled retirement plan agents, enrolled actuaries and other Circular 230 practitioners are expected to be exempt from fingerprinting “at this time.” However, it stated that they still would be required to answer the suitability questions on the PTIN application, such as whether they have been convicted of a felony in the past 10 years.
Provisional PTINs and Renewal
All PTIN and provisional PTIN holders must renew their numbers each calendar year, via an online application at irs.gov/taxpros or by filing Form W-12 after Oct. 15 and before Jan. 1 for the ensuing calendar year.
Comments on the proposed regulations on testing and fingerprinting user fees must be submitted by Oct. 4. A public hearing is scheduled for Oct. 7 at the Internal Revenue Building in Washington.
Small businesses can get more done in less time while managing their finances with best-selling QuickBooks® financial software from Intuit Inc. New and improved features in QuickBooks Pro and Premier 2012 help small businesses uncover new business insights, get organized and save steps on mundane accounting tasks. The software goes on sale September 26, 2011.
"Small business owners tell us they regularly work up to 50 hours per week," said Dan Wernikoff, senior vice president and general manager of Intuit's Financial Management Solutions division. "Knowing this, we improved QuickBooks to shave off valuable minutes and even hours in the small business owner's day. By getting time back managing their finances, small business owners can focus on what they love - their businesses."
Get New Insights
"Calendar View manages my work weeks for me," said Rebecca Doremus of RST Computer Services, Inc. in Holly Hill, Fla. "Previously, I juggled a paper calendar and an online calendar to track my appointments, to do's, and forecasts. The system was laborious and meant I duplicated a lot of entries between the two calendars. The automated calendar in QuickBooks 2012 will save me significant time managing my schedule."
Get More Organized
"Lead Center takes the pain out of managing the sales process," said Bruce Novis of MVP Anesthesia in Norwood, Mass. "Instead of leaving it to me to track each point of contact with a prospective customer in an Excel spreadsheet, Lead Center organizes my lead contacts and notes, making follow up so easy that I'll save valuable time managing contacts."
Get Time Back, Save Steps
"The new batch timesheets feature not only saves me time running payroll, but also reporting out to customers on hours worked on a certain job," said Chris Hodgdon of Chris Hodgdon's Computer Service in Kaufman, Texas. "Batch timesheets will save me meaningful time in the back office."
QuickBooks Accountant 2012
Pricing and Availability
Suggested retail prices for 2012 editions are:
Small businesses can find more ways to save time with a Mac experience they expect in the latest release of QuickBooks® financial software from Intuit Inc.
QuickBooks for Mac 2012 offers more than 50 new features and enhancements that give small businesses faster access to important information and simplify critical business tasks. The product becomes available on September 26, 2011.
"As more and more small businesses adopt Macs, we see increased adoption of QuickBooks for Mac," said Dan Wernikoff, senior vice president and general manager of Intuit's Financial Management Solutions division. "In response, we've recommitted ourselves to making the product even better. With Apple's new Lion OS, we focused on a simple, elegant and easy to use native experience, while continuing to add new features that save small businesses time."
Faster Access to Important Information
"The new search feature is powerful. It helps me instantly track down specific transactions, customer contacts, reports - you name it," said Christine Holzmann of CH Graphic Designs, LLC in Peachtree City, Ga. "With the intuitive functionality of Spotlight or Google, search will save me a lot of time finding what I'm looking for in QuickBooks."
Simplified Multi-step Tasks
"The batch entry feature for online banking transactions saves me valuable time spent entering and renaming transactions one-by-one and it saves me from making errors in the process," said George Qualley of Qualley and Bleyhl, P.L.C. in Des Moines, Iowa. "By expediting transaction entry in a fool-proof way, QuickBooks gives me more time to focus on running my law firm."
Get Up and Running Fast
Pricing and Availability
Suggested retail prices are:
Additional seats can be purchased for $209.95 each.
Intuit Inc. announced that it has restructured the QuickBooks ProAdvisor® Program, providing access to more software, training and marketing tools for all members so that accounting professionals can serve any QuickBooks client and grow their practice.
In addition, starting today, the ProAdvisor Program now incorporates a three-tiered structure with access to more benefits as an accounting professional increases their knowledge of QuickBooks and other Intuit small business solutions through Intuit's certification process.
"Since its inception, the focus of the QuickBooks ProAdvisor Program has been to provide accounting professionals with the tools they need to be successful in their practices and with the clients they serve," said Ian Vacin, leader of the QuickBooks ProAdvisor Program. "By developing a tiered structure, we are recognizing accounting professionals in the program who spend the time to become proficient in QuickBooks and other Intuit products and services geared toward small businesses."
ProAdvisor Program Structure and Benefits
For example, all QuickBooks ProAdvisor members receive unlimited U.S.-based chat support. When new ProAdvisors join the program, they also receive 90-days of unlimited, U.S.-based phone support. As members advance from tier to tier to achieve the status of QuickBooks Certified and QuickBooks Advanced Certified, they also receive unlimited U.S.-based phone support in addition to the unlimited U.S.-based chat support. Current, non-certified ProAdvisors receive unlimited U.S.-based phone support for one year from their upcoming renewal date, giving them additional time to become QuickBooks Certified or Advanced Certified.
The ProAdvisor Member Website has been completely transformed. Launching in early September, the new member website will act as the hub for accounting professionals to access their benefits and tools to set and achieve their professional and business goals. The website will continue to act as a portal to the online community of more than 60,000 QuickBooks ProAdvisors.
The Internal Revenue Service today released the specifications for the competency test individuals must pass to become a Registered Tax Return Preparer.
The test is part of an ongoing effort by the IRS to enhance oversight of the tax preparation industry. Preparers who pass this test, a background check and tax compliance check as well as complete 15 hours of continuing education annually will have a new designation: Registered Tax Return Preparer.
The test will have approximately 120 questions in a combination of multiple choice and true or false format. Questions will be weighted and individuals will receive a pass or fail score, with diagnostic feedback provided to those who fail.
Test vendor Prometric Inc. worked with the IRS and the tax preparer community to develop the test. The time limit for the test is expected to be between two and three hours. The test must be taken at one of the roughly 260 Prometric facilities nationwide.
To assist in test preparation, the following is a list of recommended study materials. This list is not all-encompassing, but a highlight of what the test candidates will need to know.
Some reference materials will be available to individuals when they are taking the test. Prometric will provide individuals with Publication 17, Form 1040 and Form 1040 instructions as reference materials.
The fee for the test has not been finalized but is expected to be between $100 and $125, which is separate from the PTIN user fee. Currently there is no limit on the number of times preparers can take the test, but they must pay the fee each time. Individuals must pass the test only once.
Only certain individuals who prepare the Form 1040 series are required to take the test. Attorneys, Certified Public Accounts and Enrolled Agents (EAs) are exempt from testing and continuing education because of their more stringent professional testing and education requirements. Also exempt are supervised employees of attorneys, CPAs, attorneys or EAs who prepare but do not sign and are not required to sign the Form 1040 series returns they prepare and individuals who prepare federal returns other than the Form 1040 series.
Approximately 730,000 return preparers have registered and received PTINs in 2011. Approximately 62 percent do not have professional credentials. The IRS does not yet know how many preparers will fall into other exempt categories, but those individuals will be required to identify themselves when they renew an existing PTIN or obtain a new PTIN beginning in October 2011.
The IRS will notify those preparers who have a testing requirement and provide more details.
At the time the current version of Publication 17 went to press, there were certain tax benefits that had not been finalized and several tax benefits were subsequently extended. See Legislative Changes Affecting the 2010 Publication 17 on IRS.gov for the details needed for study purposes.
Bringing in new clients has moved to the forefront of concerns among CPA firms with two to 20 professionals.
That finding is among the highlights of the AICPA’s 2011 PCPS CPA Top Issues Survey, released Tuesday.
The survey also found that while client retention remains a key priority for CPA firms of all sizes, it is no longer the top concern—as it was across the board in the most recent version of the biennial survey, published in 2009.
This time, firms of different sizes placed different items atop their lists. Sole practitioners rated keeping up with tax law changes and complexity as their No. 1 concern, as they did in 2007. Among the firms with more than 20 professionals, the chief concern was partner accountability and unity.
The AICPA polled 577 CPA firms divided among five size classes:
Bringing in new clients ranked as the No. 1 concern in three of the five firm size classes and no lower than third among any of the firm groups, ranking No. 2 among firms with 21 or more employees and No. 3 among sole practitioners, with whom client retention took the No. 2 spot.
Like bringing in new clients, retention of current clients ranked no lower than third among any of the firm classes. Client retention ranked No. 2 among the three smallest classes and third among the two largest classes.
The 2011 results show the continued and evolving effect of the slow economy on CPA firm priorities. Whereas survival was the top priority in 2009, at the height of the recession, the seeking and signing of new clients has taken on greater importance across the board as firms attempt to find growth opportunities in an uneven economic recovery.
“While client retention and firm growth did not top the list of top issues firms are concerned with across the board, there is no doubt that this is key to all,” said Jim Metzler, CPA, AICPA vice president‒Small Firm Interests, in a news release. “The AICPA is working with the firms to help their clients with better strategic planning and to help firms learn how to best market to future clients, retain current ones and understand the ever growing complexities of tax laws and audit and accounting standards.”
To put into perspective how much the recession has affected CPA firm priorities, consider that in 2007, before the economy shrank, the No. 1 issue was staffing. Now, finding and maintaining the client base to justify staffing levels takes precedence.
Not that staffing has fallen off the list of concerns. Retaining qualified staff ranked as the third most important issue among firms with six to 10 professionals, while finding qualified staff ranked No. 5 among firms with 11 to 20 professionals, with retaining staff the No. 6 concern.
Among other top issues affecting firms:
The 2011 PCPS CPA Firm Top Issues Survey was conducted for the AICPA by IntelliSurvey, from May 2 through May 23 via an email questionnaire sent to the AICPA’s PCPS membership. Of the 577 respondents, 77 were sole practitioners; 197 were from firms with two to five professionals; 95 were from firms with six to 10 professionals; 89 were from firms with 11 to 20 professionals; and 119 were from firms with at least 21 professionals. The margin of error was plus or minus 4 percentage points.
The survey gathers information from a range of practitioners in firms of different sizes to get a snapshot of the most critical challenges facing PCPS members. In 2007, for the first time, PCPS did not issue one overall top issues list because it was determined that averaging the answers from many types of firms does not necessarily accurately mirror the concerns of each segment.
“CPAs can use these lists to benchmark their own experiences against those of other practitioners in firms very much like their own,” Metzler said.
Click here to download an Excel file comparing the top 10 issues for each CPA firm class for 2011 and 2009.