Somewhere between your desk covered in IRS forms and your days filled with countless client calls, you may have found it hard to keep up with all the latest tax news the past few months. NATP members get a weekly synopsis of all the hottest tax news. If you’re not a member, you probably don’t know that our TAXPRO Weekly provides tax professionals with the latest tax law changes, news about tax preparer regulation and our popular tax knowledge quiz.
Here are a few items you may have missed during tax season. If you like to be in the know, an NATP membership is something you need – check out the details here!
Tests administered beginning April 16, 2012, are based on 2011 tax law and are immediately scored upon completion. Scores are automatically shared with the IRS and IRS records will be updated accordingly. If you have an online PTIN account, the test information will be updated on the “Next Steps” page in your account in 7-10 business days.
The IRS has updated the Testing Requirements FAQs page to include answers regarding testing periods and the details of passing scores. The FAQs state there is no exact number of questions to obtain a passing score as the questions have a weighted value. If you fail to obtain a passing score, your test results will provide feedback on your performance level in each Knowledge Domain.
Those who pass the exam, the tax compliance check and received a Registered Tax Return Preparer certificate from the IRS can use the RTRP designation.
There are advertising limitations on the use of the designation. All PTIN holders are subject to the advertising and solicitation provisions under Circular 230. Preparers also should refrain from using variations, i.e. Registered Tax Preparer or Registered Return Preparer. Those currently using these terms are in violation of Circular 230.
Per Notice 2011-45, there is a requirement when using any paid advertising involving print, television or radio, when the individual is represented as an RTRP to display or broadcast the following statement: “The IRS does not endorse any particular individual tax return preparer. For more information on tax return preparers go to IRS.gov.”
However, when it comes to the use of business cards, these are not generally considered paid advertising; therefore, the previous statement does not need to be included. Other Circular 230 requirements are still in effect, when properly using the Registered Tax Return Preparer designation.
Since the updated Circular 230 regulations were released we have been working with the IRS to address the Section 10.3(f)(3) provision that states an RTRP does not have the authority to provide tax advice to a client except as necessary to prepare a tax return.
The IRS has updated the Preparer Credentials FAQ page to include clarification of this provision:
To clarify, the IRS interprets this provision to permit registered tax return preparers to provide advice to a client that is reasonably necessary to prepare a tax return, claim for refund, or other document intended to be submitted to the Internal Revenue Service for a current or future tax period, regardless of whether the client has engaged the registered tax return preparer to prepare the tax return, claim for refund or other document for the tax period.
Despite receiving their certificates, RTRP’s PTINs are labeled as “provisional” in their online accounts. The IRS is currently working on the programming to change the PTIN status to “active” from “provisional.” Eventually, the PTIN automatically will show “active” status when the RTRP certificate is sent.
The IRS issues provisional PTINs to individuals who are not attorneys, CPAs, EAs, enrolled retirement plan agents or enrolled actuaries. The PTINs are provisional because these individuals must still meet testing and/or suitability requirements before a permanent or “active” PTIN can be issued to them. At this time, the IRS plans to continue issuing provisional PTINs past April 18, 2012, and will determine the future of them by December 31, 2013.
If you are wondering if anyone has listed you as a tax supervisor, there is an easy way to check. Log onto your PTIN account and click on “View Supervised Employees.”
If there is someone listed whom you currently don't supervise, you can call the PTIN helpline and have the person removed. This will automatically create a testing and CE requirement for the removed person. Supervisors should document when an employee begins and ceases working for them. Also, they should periodically check the online listing and report any inaccuracies in a timely manner.
New Form 14157
The IRS has released Form 14157, Complaint: Tax Return Preparer. This form is to be used by the public to submit a complaint about a preparer and for taxpayers to report alleged fraudulent activity and abusive tax schemes by a tax preparer and/or tax preparation business or firm.
Revised Form 2848, POA
In October 2011, the IRS released an updated Form 2848, Power of Attorney and Declaration of Representative, that contained changes including adding the RTRP category of representatives and requiring all representatives to provide their PTIN. Another new change requires taxpayers filing a joint return to each file a separate power of attorney on Form 2848.
A POA submitted after March 1, 2012, must be on the revised form. A Form 2848 filed before March 1, 2012, is still valid. A POA on the CAF system for more than seven years will be deleted.
Expanded Veterans Tax Credit
Notice 2012-13 provides guidance and the forms employers can use to claim the expanded tax credit for hiring veterans. The IRS announced that employers will have more time to file the required certification form for employees hired on or after November 22, 2011, and before May 22, 2012.
The VOW to Hire Heroes Act of 2011 provides an expanded credit to businesses that hire eligible unemployed veterans. The credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 for tax-exempt organizations. The amount of the credit depends on a number of factors.
Penalty Relief and Expanded Installment Agreements
The IRS announced an expansion of the “Fresh Start” initiative to help struggling taxpayers by taking steps to provide new penalty relief to the unemployed and making installment agreements available to more people. Wage earners (employees) who have been unemployed for 30 days or longer will be able to avoid failure-to-pay penalties during a six-month grace period (October 15, 2012 for 2011 taxes). In addition, the IRS is doubling the dollar threshold from $25,000 to $50,000 for taxpayers to be eligible for installment agreements to help more people qualify for the program as well as extended the maximum payment period from 60 months to 72 months. For more information, review IR-2012-31.
Telephone Excise Taxes
The IRS reminds taxpayers to timely request a Telephone Excise Tax Refund if they have not already done so. Since the Service stopped collecting the tax on long distance service in 2006, it has administered a simplified procedure for taxpayers to request a refund of excise taxes paid under section 4251 on nontaxable services that were billed after February 28, 2003, and before August 1, 2006. Taxpayers have until July 27, 2012, to request refunds of the telephone excise tax. More information can be found in Announcement 2012-16.