Competency Testing for Registered Tax Return Preparers Set to Start

As part of its ongoing initiative to regulate previously unenrolled tax return preparers, the IRS announced on November 22 that competency testing for registered tax return preparers will start next week (IR-2011-111).

The IRS announced that the fee for taking the competency test will be $116 ($27 of which is the IRS user fee). The test will be a timed, 2.5-hour exam. It will cover the 2010 Form 1040 and its related schedules. The test will consist of 120 multiple-choice and true/false questions. Test takers will not be allowed to bring in any materials but will have access to Form 1040, Form 1040 instructions, and Publication 17, Your Federal Income Tax.

There is no limit on the number of times the test can be taken. Preparers who currently have provisional preparer tax identification numbers (PTINs) will have until December 31, 2013, to pass the test.

The test is available in English only at this time and will be given at Prometric Inc. test centers.

The IRS warns that initial test takers will not receive their test scores for two to six weeks to allow the IRS to validate the exam and determine the pass/fail cutoff.

Individuals who are CPAs, attorneys or enrolled agents are not required to take the competency test because they already meet more stringent requirements to obtain their professional credentials. Nonsigning preparers who are supervised by a CPA, attorney or enrolled agent and who work at a firm owned at least 80% by CPAs, attorneys or enrolled agents are also exempted from the testing requirement. Preparers who do not prepare, or assist in the preparation of, all or substantially all of any Form 1040 series return are also exempt from the testing requirement.