The California Tax Education Council is cautioning tax preparers that they still need to meet state-mandated requirements despite the Internal Revenue Service’s loss in its court appeal to regulate tax preparers.
On Tuesday, the D.C. Circuit Court of Appeals ruled against the IRS in its attempt to reinstate the Registered Tax Return Preparer program requiring testing and continuing education of tax preparers (see Tax Preparers Defeat IRS in Appeals Court Ruling on Licensing Scheme).
The court decision affects nearly 40,000 tax preparers in California, according to the California Tax Education Council, or CTEC. However, they are still required under state law to meet certain requirements. In California, paid tax preparers who are not attorneys, CPAs or Enrolled Agentss are required by state law to register with CTEC, a state-mandated nonprofit organization that helps ensure tax preparer compliance by enforcing registration requirements. CTEC-registered tax preparers, known as CRTPs, must complete 60 hours of qualifying education, obtain a $5,000 surety bond to protect clients against fraud, plus complete 20 hours of continuing education each year. Despite the IRS court ruling, CTEC requirements are still in full force.
The IRS’s proposed regulations would have required certain tax preparers to complete 15 hours of continuing education each year and pass a competency exam. Only attorneys, CPAs and EAs were exempt since they must already meet testing and educational requirements.
“The IRS initiative was very similar to California rules as far as its focus on tax education and consumer protection,” said CTEC chair Mary Beth LaMunyon-Jones in a statement.
The IRS said on Tuesday that it is still reviewing the decision regarding its appeal. CTEC pointed out that the IRS requirement that all paid tax preparers register for a Preparer Tax Identification Number, or PTIN, remains in effect.
Other states that also regulate tax preparers, such as Oregon, also still have their requirements in place.