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IRS Releases Specifications for Registered Tax Return Preparer Test – Doesn’t it just give you the chills?

September 7, 2011 11:40 pm / 1 Comment on IRS Releases Specifications for Registered Tax Return Preparer Test – Doesn’t it just give you the chills?

Katherman Kitts & Co. LLP

Choose A Tax Preparer That Has a Clue

By Stacie Kitts, CPA

Here it is, what all un-registered (non CPA’s, attorneys, or enrolled agent) tax preparers have been waiting for.  The specs for the competency test  that will award those who pass the title of  “Registered Tax Return Preparer.”

Wowwee doesn’t it just give you the chills….

No – well maybe that’s because CPA’s and attorneys can sign tax returns even if they don’t have a single clue what they are doing.  They get to do this without passing a test (other than the initial licensing exam which he/she could have taken a hundred years ago – so not even relevant today) or taking a single hour of tax related continuing professional education.  You know, training that would keep you up to speed on the actual tax laws that apply to tax return preparation.

So what do you think the odds are that  many of these licensed “professionals” would have a difficult time passing the new competency test?

Ya, scary jacked up regulation that leaves out a large number of people who are trusted to prepare your tax return.

Fixing the mistakes of these so called professionals is a large part of my practice.  I guess I should be grateful instead of loosing my mind over the absurdity of it all.

WASHINGTON — The Internal Revenue Service today released the specifications for the competency test individuals must pass to become a Registered Tax Return Preparer.

The test is part of an ongoing effort by the IRS to enhance oversight of the tax preparation industry. Preparers who pass this test, a background check and tax compliance check as well as complete 15 hours of continuing education annually will have a new designation: Registered Tax Return Preparer.

The specifications identify the major topics that will be covered by the test, which will be available starting this fall. Although individuals who already have a provisional preparer tax identification number (PTIN) from the IRS do not have to pass the exam until Dec. 31, 2013, they may take the exam at any time once it is available.

The test will have approximately 120 questions in a combination of multiple choice and true or false format. Questions will be weighted and individuals will receive a pass or fail score, with diagnostic feedback provided to those who fail.

Test vendor Prometric Inc. worked with the IRS and the tax preparer community to develop the test. The time limit for the test is expected to be between two and three hours. The test must be taken at one of the roughly 260 Prometric facilities nationwide.

To assist in test preparation, the following is a list of recommended study materials. This list is not all-encompassing, but a highlight of what the test candidates will need to know.

Some reference materials will be available to individuals when they are taking the test. Prometric will provide individuals with Publication 17, Form 1040 and Form 1040 instructions as reference materials.

The fee for the test has not been finalized but is expected to be between $100 and $125, which is separate from the PTIN user fee. Currently there is no limit on the number of times preparers can take the test, but they must pay the fee each time. Individuals must pass the test only once.

Only certain individuals who prepare the Form 1040 series are required to take the test. Attorneys, Certified Public Accountants and Enrolled Agents (EAs) are exempt from testing and continuing education because of their more stringent professional testing and education requirements. Also exempt are supervised employees of attorneys, CPAs, attorneys or EAs who prepare but do not sign and are not required to sign the Form 1040 series returns they prepare and individuals who prepare federal returns other than the Form 1040 series.

Approximately 730,000 return preparers have registered and received PTINs in 2011. Approximately 62 percent do not have professional credentials. The IRS does not yet know how many preparers will fall into other exempt categories, but those individuals will be required to identify themselves when they renew an existing PTIN or obtain a new PTIN beginning in October 2011.

The IRS will notify those preparers who have a testing requirement and provide more details. Once the test is available, preparers who have on-line accounts can use their accounts to schedule a test time and select a Prometric site.

At the time the current version of Publication 17 went to press, there were certain tax benefits that had not been finalized and several tax benefits were subsequently extended. See Legislative Changes Affecting the 2010 Publication 17 on IRS.gov for the details needed for study purposes.

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Is Stripping An Art Form or An Obscenity – Kelly Phillips Erb Explains The Tax Connection

June 18, 2011 6:45 pm / Leave a comment

Is stripping an art form

Is stripping an art form

By Stacie Kitts CPA

These days I rarely have time to do anything that doesn’t directly involve running my accounting firm.  But Kelly – also known as the TaxGirl ® penned an  article that caught my eye Strip Club Doesn’t Meet  “Bare Minimum” in Court.  Punny huh?!

In fact, it so entertained me that I had to change gears to tell you about it.  I admit it, even I think tax is a dry subject for a blog.  But there is that rare story that entertains.

The fundamental question posed in Kelly’s post – Is exotic dancing an art form?

It turns out that in the state of New York, since 1965, sales taxes are imposed on the fees paid by patrons at strip clubs. However, Nite Moves, an adult club in Latham, New York, begs to differ with the state’s interpretation of adult and exotic dances. The club was audited in 2005 by the New York Division of Taxation and told to remit nearly $125,000 in unpaid sales tax – plus interest – for fees paid for door charges and private dances (if you have Tina Turner’s “Private Dancer” song in your head now, you’re not the only one). But Nite Moves claims that the assessment was in error. They believe that the fees paid should be exempt from sales tax and appealed.

In its argument, Nite Moves cited Tax Law § 1105 (f)(1) which exempts:

Any admission charge … except  charges  for  admission  to  race  tracks,  boxing,  sparring or wrestling matches or exhibitions which charges are taxed under any other law of this state, or dramatic or musical  arts  performances,  or  live  circus performances, or motion picture theaters, and except charges to a  patron  for  admission to, or use of, facilities for sporting activities  in which such patron is to be a participant, such as bowling alleys  and  swimming pools.

(Emphasis added)

In other words, they believe that fees for lap dances should be exempt just as fees for the ballet.

The court ultimately disagreed.  They concluded that the club didn’t provide enough evidence that would prove that the “private dances offered in the club were choreographed performances.”  The club simply didn’t successfully sell the court on their argument that stripping is an art form.

I don’t know, swinging around on a pole – upside down secured by a single limb – plus, some of those girls are really bendy and have some pretty impressive acrobatic skills.  (What?  I’ve seen Striptease – you know with Demi Moore) Seems to me that there is some skill involved, some artistic expression…and shall I say it, even some talent.   I think, yes, I think I might have been able to sell that in court….but that’s just me.

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