Monday, May 14, 2012

Complete Study Course and Tax Season Work Before Taking RTRP Exam

The IRS has formally launched the long awaited registered tax return preparer exam. But most tax preparers are expected to wait until after the upcoming tax season before taking the test.
Prometric, the third-party test administrator, is presently only offering the examination at a few of its locations. As the tax preparer exam is added to more sites, it will eventually be available at more than 260 Prometric testing centers.
As previously announced, the examination is open book. However, the only reference information allowed is IRS Publication 17 along with Form 1040 and the instructions for 1040. These materials are available online at the Prometric centers. Test takers cannot bring their own copies. A handheld calculator is also provided by Prometric. No other devices are permitted.
Early test takers are unable to obtain immediate results. The initial 2,400 individuals taking the RTRP exam will receive their pass or fail results by mail several weeks after their testing date. This permits validation of the test questions. Subsequent test takers will receive immediate pass or fail results.
The IRS RTRP test covers only Form 1040 and associated schedules. With just two and a half hours to answer 120 questions, test takers don't have sufficient time to linger over reference materials for locating correct answers. Although repeating the exam is allowed for those who fail, a fee of $116 is payable each time.
Consequently, study in advance for the exam is the best option. Even individuals who have completed their first tax season in early 2012 will benefit from a tax return preparer training course. This provides a review of all the elements covered on the RTRP exam.
An important factor to consider about the tax preparer test is that the current version is based upon the tax rules for 2010. Of course, any questions covered by Circular 230 relate to the most recently released regulations on August 2, 2011. After next April 15, the RTRP exam will cover the 2011 Internal Revenue Code - the same tax laws that preparers will have followed for preparation of tax returns in 2012.
So, waiting to take the RTRP test in the late spring or early summer of 2012 has advantages regardless of tax preparation experience. First, new tax preparers have time to gain some experience and complete an RTRP study course. A tax preparer with a PTIN for 2012 actually has until December 31, 2013, to pass the test. Secondly, even experienced tax preparers may need a review course for the RTRP exam. This is because they probably haven't memorized all the updated limits on tax deductions and credits after having relied on tax software for that data.
For now, the IRS has put background checks on tax preparers in a holding pattern. Submission of fingerprints is suspended at least temporarily pending IRS guidance on the background check process in coming months. Meanwhile, the IRS will issue a registered tax return preparer certificate to anyone who passes the RTRP exam and a tax compliance check. These individuals may then begin using the designation of Registered Tax Return Preparer although they are still subject to background check implementation in the future.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication