IMGCAP(1)]The Internal Revenue Service wants all paid tax preparers to register for a Preparer Tax Identification Number in time for next tax season, and is requiring many preparers to undergo continuing education and testing. But how much CPE is too much?
At a recent conference, Jody Stamback of the IRS office in Salt Lake City discussed the new PTIN requirements. The PTIN will soon be required for all individuals who are compensated for preparing, or assisting in the preparation of, all or substantially all of a U.S. federal tax return or claim for refund. A Social Security Number will no longer be a valid ID number for paid preparers beginning Jan. 1, 2011. The PTIN must be used after that date.
Stamback also informed attendees of the continuing education requirement for anyone to maintain the PTIN. That requirement is 15 continuing education hours per year. However, the rules specify that those 15 hours be three hours in federal tax law updates, two hours of ethics and 10 hours of federal tax law.
That discussion started these authors wondering what constraints exist for those individuals who possess multiple certifications or a significant diversity of practice. Suppose a person is a CPA with a CFE credential as well and his or her practice involves government audits and tax work.
Continuing professional education requirements for CPAs vary by state, but do not seem to have many specific requirements. However, doing government audits requires that a person have 80 hours of CPE every two years and that at least 24 hours of that be in subjects directly related to the government environment and to government auditing (according to Section 3.6 of the Government Auditing Standards).
To maintain the CFE certification, a person must have 20 hours of CPE in every 12-month period and at least 10 of those hours must be fraud-related.
[IMGCAP(2)]Therefore, our hypothetical accountant who is a CPA and CFE doing government and tax work must have (depending on the state in which he or she lives) 80 hours of CPE every two years. Twenty-six of those hours must be in tax, four in ethics, 24 in government accounting or auditing, and 20 in fraud. That uses up 74 of the required 80 hours for the two-year period.
Some of the CPE sessions that these authors have attended recently that might not count, except for the remaining six hours, were on insurance reform, investments and the economy, both locally and nationally. A popular topic seems to be speakers from professional or college sports teams or business people speaking on their specific business or industry.
Even basic topics such as managerial accounting would not seem to fit into the topics of tax, government or fraud. Many topics on technology would also seem to be difficult to fit into those three required topics of our hypothetical accountant.
The Accreditation Council for Accounting and Taxation, headquartered in Alexandria, Va., offers four certifications of its own: Accredited Business Advisor, Accredited Tax Advisor, Accredited Tax Preparer and Accredited Retirement Advisor. If an individual were to receive all four credentials, he or she would have to obtain 120 hours of CPE every three years.
Eighty-six of those hours would have to be in taxation and related subjects (accounting, finance, technology and business law), 24 would have to be in eldercare issues (retirement, asset management, Social Security, Medicare, long-term care, trusts and estates) and four hours in ethics. That would use up 114 of the required 120 hours.
We recognize that the categories that include accounting, tax, finance, technology and business law are broad, but it seems like overkill to be so specific in the type of CPE required by the various certifications.
Ron Mano and Jennifer Harrison teach accounting at Westminster College in Salt Lake City.
