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Matters regarding the IRS Competency Examination you are asking about are examined in this articles series.
If you are preparing income tax return for a fee and propose to continue doing so, you have to know whether you need to go through the process of becoming a Registered Tax Return Preparer. Take five minutes to learn about all requirement apply to your specific situation.
What does the process of becoming a Registered Tax Return Preparer involve?
This article will help you to figure out.
There are several steps to complete and the compete ncy examination is just one of them.
Those steps are:
1. Obtain a PTIN by applying to the IRS and renew that PTIN annually.
2. Submit fingerprints to the IRS for a background and tax compliance check
3. Pass the competency exam
4. Take continuing education courses annually.
First, you have to make sure what requirements are applicable to you. Check out this chart from the IRS website to help you visualize which of the requirements to become a Registered Tax Return Preparer apply to your particular situation. The category column shows your possible professional situations as tax preparers.
Notice that all tax return preparers must meet the PTIN and tax compliance check requirement. Attorneys, CPAs and enrolled agents don't need to meet the background check, competency test and continuing education requirements.
Supervised preparers and non-1040 preparers must meet the PTIN, tax compliance check and background check but don't have to meet the competency test and continuing education requirements.
If you are not included in the categories of tax preparer mentioned above, you have to go through the process of becoming a registered tax return preparer (RTRP).
Who are supervised preparers?
The answer to this question comes from the IRS Notice 2011-6 "Implementation of Rules Governing Tax Return Preparers" Basically, a supervised preparer is any individual eighteen years or older who prepare, or assist in the preparation of, all or substantially all of a tax return or claim for refund for a fee. This individual must apply for and obtain a PTIN if he/she meets the four criteria establish in this Notice, namely:
1.The individual is supervised by an attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary authorized to practice before the IRS under Circular 230 §10.3(a) through (e);
2.The supervising attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary signs the tax returns or claims for refund prepared by the individual;
3.The individual is employed at the law firm, certified public accounting firm, or other recognized firm of the tax return preparer who signs the tax return or claim for refund; and
4.The individual passes the requisite tax compliance check and suitability check (when available).
Supervised preparers are neither subject to a competency examination nor continuing education requirements. However, supervised preparers may not sign any tax returns they prepare or execute any other functions allowed a registered tax return preparer.
As supervised preparers have to obtain a PTIN, they are subject to some duties and restrictions relating to the practice established in Subpart B of Circular 230. The IRS may, by written notification, revoke a supervised preparer's PTIN if the tax return preparer willfully violates applicable duties and restrictions prescribed in Circular 230 or engages in disreputable conduct.
A very important distinction is that a supervised preparer working for a Registered Tax Return Preparer who is not a lawyer, a CPA or an enrolled agent (under Circular 230) must have a PTIN and pass the competency examination. The exception for supervised preparers only applies if the individual is supervised by an attorney, CPA or an enrolled agent and the supervised preparer is employed by a law firm, CPA firm or other recognized firm (a firm that is at least 80 percent owned by attorneys, CPAs, or enrolled agents).
Who are non-1040 preparers?
Non-Form 1040 series preparers are individuals who do not prepare, or assist in the preparation of, any Form 1040 series tax return or claim for refund, except a Form 1040-PR or Form 1040-SS, for compensation.
When applying for or renewing a PTIN, non-Form 1040 series preparers must certify that they do not prepare, or assist in the preparation of, any Form 1040 series tax return or claim for refund, except a Form 1040-PR or Form 1040-SS, for compensation.
If from the examination of the about information you conclude that you must take the IRS competency examination, then this series of articles will help you to tune into that process as a winner by being well informed about.
Extensive amount of material is included in a more detailed outline published by the IRS in early September 2011. Candidates to the IRS competence examination are given the opportunity to learn more about what they can expect to find in this exam. Now is the time for you immerse yourself in preparing for success in the exam by becoming informed about each detail of the IRS competency examination process.
Read the next article of this series,"Who must take the IRS Exam".
Please, don't let time run out without you taking action toward becoming informed about the IRS exam. Visit our website and know more about 1040 Exam Prep Study Guides. | 
