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IRS Releases Specifications for Registered Tax Return Preparer Test – Doesn’t it just give you the chills?
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.
- Publication 17, Your Federal Income Tax
- Form 1040, U.S. Individual Income Tax Return
- Form 1040 Instructions
- Circular 230, Regulations Governing Practice before the Internal Revenue Service (rev. 8/2/11)
- Publication 334, Tax Guide for Small Business
- Publication 970, Tax Benefits for Education
- Publication 1345, Handbook for Authorized IRS e-file Providers
- Form 6251, Alternative Minimum Tax – Individuals
- Form 6251 Instructions
- Form 8879, IRS e-File Signature Authorization
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.
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.
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.
- Exotic dance, artistic performance: tomato, tomahto, taxes (dontmesswithtaxes.typepad.com)
- NY court says strip club’s lap dances are taxable (boston.com)
- NY court says strip club’s lap dances are taxable (msnbc.msn.com)
- NY court says strip club’s lap dances are taxable (msnbc.msn.com)
- NY court says strip club’s lap dances are taxable (hosted.ap.org)
- Lap dancers take it on chin from N.Y. court (cbsnews.com)
By Stacie Kitts, CPA
I like to think of myself as a recovering recovered bubblehead. You might know the type, she was portrayed by Calista Flockhart in the late 90’s as Ally McBeal. The character was described as “annoying and demeaning to women (specially professional women) because of her perceived flightiness, lack of [knowledge], short skirts“, and….. well you get the point.
As ridiculous as it sounds, there was a time – a long time ago in a galaxy far far away – when I thought I had found the right combo. Often sporting an outfit that only Ally McBeal (an imaginary made up TV person, so like no real person should have tried to pull this off) would wear, I was, sadly, the “sexy” CPA.
Ludicrous, I know!
This style choice did not endear me to my female colleagues. And had you met me in those days, you might not have noticed that I had a brain at all. This, of course, is not the impression you want to make when your brain is what you are selling.
Flash forward ……. now we are visiting my solo “stay home” tax practice period. This quarter decade represented my relaxed period, where comfort was my style of choice. My old warn out sweats and stylish jammie sets worn around the home office probably earned me the label of “comfy” accountant. Also, NOT the serious accountant image you want to project, particularly when you are trying to convince a person who has amassed a considerable amount of wealth that you are the advisor who is going to help them keep it.
Interestingly, of these two periods, the comfy accountant was/is the hardest to overcome – a few enlightening moments, and some mentored wisdom eradicated the “sexy” CPA fairly quickly. But taking the comfy out of accounting was like a slow excruciating death.
Even so, it’s done. These days I work in an office building and I look forward to casual Fridays where I can throw on some jeans with my conservative cardigan. I might even spice it up with some colorful shoes or fun jewelry. But for the most part, first impressions are my main concern and my style choices scream I’m confident, educated, serious and professional.
Your fashion choices actually play a large part in selling you and my own fashion history is testament to this.
Being a recovered fashion bubble head probably explains why I recently had a slight meltdown when my assistant commented on how cute my suit was but added, “Your top makes you look like a big orange pumpkin.”
Let me explain.
That morning I had arrived at work wearing a conservative black suit over a cute orange top with cute orange shoes carrying my cute salmon colored purse. Just the right >pop< of color. I felt completely prepared for my big pitch to a large potential client. I was clear on the tax issues and confident in my ability to sell it. But that was before I realized that my clothing choice looked like a Halloween inspired disaster.
I hurried to the bathroom where I stood in front of the full-length mirror and thought, Oh-My-God, she’s right. Why did I pick orange and black? I look ridiculous.
Now my confidence is waning. I can’t get the pumpkin image out of my head. How was I going to sell ME and MY skills when I looked like “that” lady. You know, the one that can’t possibly own a mirror because if she did she wouldn’t be wearing that!!!!!!
My head starts to fill with possible solutions: go home and change – nope not enough time, swap blouses with a co-worker, nope not an option, run to the mall – yes there might be enough time for that there’s one right across the street. I gathered all the paraphernalia I needed for the meeting, business cards, portfolio, flyer about the company etc. and head out.
I found parking rather quickly and felt the relief flooding through my system. I ran toward the door and pull on the handle. Locked!!! It’s locked. I look at the hours – “OPEN 10am”
10AM, what? …..Shut down by my lack of knowledge about mall hours.
I pulled out my cell phone and click a button so I could see the time. 9:30 – No time to wait until it opens, find an appropriate blouse and still get to the meeting on time.
I’m screwed, I’m screwed, I’m screwed.
Despondent, I slowly slink back to my car and try to convince myself that, it’s no big deal, you can still sell it, it’s not that bad, forget it. Ya right, I was a wreck. So as I headed toward certain rejection, I resolved myself to make my pitch just the same.
But miracle of miracles, not only did I arrive early to the meeting, but by some grace of god, the meeting was across the street from a mall. A mall that was open!
It wasn’t too late, I might pull it off. I am elated, rather giddy in fact. I top the escalator and see just the perfect thing. How wonderful. I try it on and it looks great. Stepping out of the dressing room, I spot a manned sales register.
Hello, I’m in a hurry can you ring this up for me really fast?
I am sorry dear, but we just opened and it will take some time to get the registers up.
HUH, really, what? There’s noo time? NooooTime!
At this point, I’m thinking run, run with the cute blouse, go ahead make a dash for it…..it’s your only hope….It was amazing the amount of thoughts that flowed through my mind in those few seconds. Could I get away with it, I would come back later and pay, maybe she would hold onto my wedding ring for collateral.
She must have read the desperation in my expression because she says, “Wait, I think the register over here is up. Let’s see.” And glorious day, it was.
Sporting my new blouse with renewed confidence and relieved that I wasn’t a fugitive from justice, I arrived in time, made my pitch and yes, landed the client.
Hurray, disaster averted- thanks to the right first impression and my cute new blouse!
By Stacie Kitts, CPA
When I read a story about someone who appears to have been messing with the tax system for some thirty years, it makes me wonder…..who in the heck did their taxes, and why did it take so long to get busted.
The Orange County District Attorney is reporting that James and Dorothy Klinger, owners of Jamo’s Gardening and Modern Tree Services Inc. are charged with 28 counts of failing to file a return with intent to evade tax, 28 counts of willful failure to pay taxes, and some felony counts for lying about their business to a worker’s compensation insurance company.
These two are looking at spending the rest of their lives in prison if convicted.
They appear to have used an old school tax crook technique and kept two sets of books. You know, one that showed the “real” dollars and one that was a work of fiction.
Was it worth it? You decide….
They are accused of underreporting about $3.6 million in income and $3 million in wages. This translates to about 1.9 million that should have been paid over in taxes (give or take) that they got to keep – for a little while anyway.
I don’t know about you, but $2 million isn’t enough money to risk a 40 year prison sentence. Am I Right!?
- Anonymously ‘squeal’ on tax cheats (dontmesswithtaxes.typepad.com)
- Top 10 tax tips from CPAs, also known as Letterman’s annual spoofing of taxes (dontmesswithtaxes.typepad.com)
- IRS Reminds Taxpayers How To Provide Earthquake Relief For Japan (staciesmoretaxtips.wordpress.com)
- 2011 Depreciation Deduction Limitations – (and a classic video from The Cars) (staciesmoretaxtips.wordpress.com)
By Stacie Clifford Kitts, CPA
Seems like I am always reading someones top something… tax/accounting/business list and it always makes me wonder – just how does someone get on this list anyway?????
Like for example take Accounting Today/Tomorrow/WebCPA. This group publishes a top 100 most influential people in the accounting industry list. Every year I read it over and wonder – how do they decide who is “most influential” anyway? I mean really, is this a scientific thing? Are there compliance criteria – like a PPC guide “How to Determine the Most Influential People in Accounting” – we are talking about accountants here – I assume there’s a checklist?
I do hope its more scientific than just a bunch of journalists sitting around a conference table, sipping coffee and munching on donuts while someone writes names on a white board. Just picture it, a bunch of bored staff writers some twisting slightly in their chairs, some lounging about, others lazily calling out names. Then someone says, “hey cross off Sally Johnson, she was rude to me at blah blah conference. she doesn’t make it this year.” Yowser,I hope it doesn’t work like that!!!
Recently, I’ve been contacted by a “.com site” or two. These sites were letting me know that I could be listed on a top something list….so –be sure to mention it at Stacie’s More Tax Tips- wont you?
While I get how this whole quid pro quo thingy works, I have declined 100% of the “link to us, we’ll link to you” offers. I’ve even turned down click for payment offers because I didn’t think the link topics where appropriate for my my site.
But you know what, I’ve decided that gosh darn my blog is interesting.. And yes siree, I deserve to be on a top anything list.. And, it has absolutely nothing to do with quid pro quo. Nope, they of course see the genius that is my blog and feel compelled to share. So thanks to bschool.com for naming Stacie’s More Tax Tips in the 50 best Blogs to Get You Through Tax Season.
Oh by the way, the picture is of me and the grandbaby enjoying Christmas day with the family!
- Ping Your Way To a Successful Social Marketing Strategy – It’s A Whole Lot Better Than Being an A-Hole (staciesmoretaxtips.wordpress.com)
- 2010 in Review – The Health of Stacie’s More Tax Tips – I Feel Like Doing The Snoopy Dance! (staciesmoretaxtips.wordpress.com)
- Snubbed Again! And a Sincere Apology (staciesmoretaxtips.wordpress.com)
- Are You All a Twitter About Tax News? Now You Can Follow The IRS @IRSnews (staciesmoretaxtips.wordpress.com)
- IRS Presents:Ten Things Tax-Exempt Organizations Need to Know About the Oct. 15 Due Date (This is a how to on keeping your exempt status) (staciesmoretaxtips.wordpress.com)
- Accounting blogs for the kids (dontmesswithtaxes.typepad.com)
- Picking Apart the IRS’ Top 10 Tax Time Tips (staciesmoretaxtips.wordpress.com)
HERE’S A LESSON IN QUESTIONABLE CUSTOMER SERVICE – DON’T MESS WITH SOMEONE WHO HAS A BLOG THAT PEOPLE ACTUALLY READ
By Stacie Clifford Kitts CPA
I just can’t help myself. I need to tell you because you are not going to believe what I am doing right now.
If you are familiar with popular tax and write-up software companies, i.e. you’re a CPA or tax professional, then you might recognize the number that’s showing on my phone in this picture.
Let me break down what you are looking at.
The 800 number showing on the screen represents the “customer service” number for my tax software provider. The bottom right hand number represents the time that has passed since I have been on the phone trying to resolve an issue with the software.
Now the first hour of time that is depicted reflects the time I spent with a technician who was trying to get my custom letterhead to work properly. The idea of adding your letterhead to the software is to save time. That is, when I print a tax return, the transmittal letter and filing instructions will print on my letterhead eliminating a processing step. Yeah for everyone because the less time I spend on a return theoretically the more savings I can pass onto my clients. Very cool – if it worked!
Anyway, the tech was very nice and told me he would call me back tomorrow when he had more time to figure out why it wasn’t working.
This is when I made my fatal mistake and asked to be transferred to a different department so I could resolve yet another problem with the software. The person who took this call was unable to assist me and asked if she could put me on hold to research the issue. As of the writing of this blog, I have been on hold for over 65 additional minutes (a total of 2 hours and 5 minutes of time on the phone with you know who).
What do you think? Is my friendly customer service rep who had no idea how to answer my question heading home, or maybe she’s already home getting ready for bed spending time with her family – while I languish on hold like a spurned desperate lover hoping someone will come back to the phone and resolve my problem.
That’s right loyal readers, she forgot about me. ***Ugh*** I feel like such a loser. 😦