To prepare tax returns in California, non-exempt(1) tax preparers must meet the education and registration requirements of the California Tax Education Council (CTEC). Initially, this requires an applicant to pass a 60-hour qualifying education course and subsequently meet the annual 20-hour education requirements to become a California Registered Tax Preparer (CRTP). CRTPs are required to reregister with CTEC annually. CTEC only reregisters those who have completed their annual CE requirements.
Under the new IRS Voluntary Annual Filing Season program, non-exempt tax preparers can obtain a “Record of Completion” and be included in a database on IRS.gov that will be available by January 2015 to help taxpayers determine return preparer qualifications.
To obtain a Record of Completion, a practitioner must meet the following requirements:
- Complete 2 hours of CE in ethics from an IRS-approved education provider;
- Complete 10 hours of CE in federal tax subjects from an IRS-approved education provider;
- Take and complete an Annual Federal Tax Refresher (AFTR) course from an IRS-approved education provider. An AFTR course includes IRS-specified content and provides a minimum 6 hours of CE;
- After taking the AFTR course, pass a 100-question timed (3-hour) examination administered by the IRS-approved provider of the AFTR course, with a minimum passing grade of 70%;
- Complete all of the above requirements by December 31, 2014; and
- Have a valid PTIN for 2015.
Because CRTPs have already demonstrated their competency by passing the 60-hour qualifying education course and annually maintaining their continuing education, the IRS has exempted them from having to take the Annual Federal Tax Refresher (AFTR) course and passing the course’s timed 100-question competency examination to obtain a Record of Completion. In addition, their CTEC education requirements will meet the IRS requirements. Thus a CTRP in good standing will have already met all of the IRS requirements of the new program and will have a simplified process to obtain a Record of Completion. The following is the process for CRTPs:
- CTEC will provide the IRS access to CTEC’s database of registered preparers for 2015. The IRS will begin running checks on the database right after the October 31, 2014 registration due date. They will continue that process for late registrations through December 31, 2014. Note: A CRTP must be registered by December 31 to qualify.
- The IRS will compare that list to the IRS PTIN list and mark those who are on the CTEC list and the IRS PTIN list as exempt from having to complete the Annual Federal Tax Refresher (AFTR) course. PTIN renewals are permitted after December 31.
- The IRS will verify the CRTP’s education in the PTIN database.
- Once the IRS has marked a CRTP’s PTIN account exempt for the AFTR course, verified the CRTP has met the education requirements, and renewed the PTIN, the IRS will send the CRTP a notice to visit the PTIN account.
- In the PTIN account, the CRTP will sign a statement that he or she will comply with Circular 230, Subpart B—“Duties and Restrictions Relating to Practice Before the Internal Revenue Service,” and then the CRPT can go to the secure mailbox and retrieve/print the record of completion.
- The CRTP will be included in a database on IRS.gov that will be available by January 2015 to help taxpayers determine return preparer qualifications.
VERY IMPORTANT – CRTPs must complete Step 5 to obtain the record of completion. There are consequences for not obtaining the record of completion, even though this program is voluntary. Only those unenrolled(2) tax return preparers who have been issued a Record of Completion for the calendar year of preparation AND the calendar year of representation will be permitted to represent taxpayers before the IRS during an examination of a return that the preparer signed or prepared.
(1) Tax preparers exempt from the California CTEC requirements include Enrolled Agents, CPAs, and Attorneys.
(2) Enrolled tax return preparers include Enrolled Agents, CPAs, and Attorneys.