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Tax preparers required to take exam

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More than 16,000 Tennessee tax preparers have now registered with Internal Revenue Service, as required by recent regulations, but about 7,000 of them must take an IRS competency examination by Dec. 31, 2013, or they will not be able to prepare tax returns for compensation.

So far, 54 tax preparers in Tennessee have passed the competency exam and, as a result, have been given the new credential of Registered Tax Return Preparer.

Enrolled agents, CPAs and attorneys are not required to take the exam because they already have testing requirements.

“Preparers who are required to take the IRS competency exam have about 18 months left to study and pass it,” said IRS spokesman Dan Boone. “The IRS urges them to take the exam soon in case they have to retake it and to avoid a potential flood of last-minute exam takers.”

Three years ago, the IRS began a program to register paid preparers and require certain ones to pass a competency test.

In addition, paid preparers are expected to take continuing education courses and meet ethics standards.

The IRS will eventually create a publicly searchable database that will allow taxpayers to see if their tax preparers have met IRS standards or to find a tax preparer in their ZIP code area. The database will also show any credentials held by the preparer, including the new RTRP credential.

Last year more than 1.5 million individual federal returns, about 54 percent of the total returns filed, were prepared for Tennessee filers by paid tax preparers.

Nationwide, close to 87 million returns, about 60 percent of the total, were prepared by paid tax preparers.

Boone also reminds taxpayers who requested a filing extension for their 2011 federal income tax returns on or before April 18 and have yet to file that the extended filing deadline is Oct. 15.

For returns prepared in 2012, paid tax preparers must, at the least, hold a preparer tax identification number, which must be shown on tax returns they prepare.

More information about the IRS return preparer program is available at www.IRS.gov/PTIN.