Author: Maria-Lisa Caldwell, Esq, NASBA General Counsel and Director of Compliance Services
Posted: August 17, 2011

The IRS is finalizing its new continuing education requirements for tax preparers, and NASBA has offered comments and recommendations to the agency about creating procedures and standards to approve high-quality providers.

The IRS has indicated that as early as January 2012, it will require registered tax return preparers who prepare Form 1040 series returns, and who are not attorneys, CPAs or enrolled agents, to obtain 15 hours of continuing education every year. There are about 650,000 registered tax return preparers nationwide, and approximately 400,000 of them will fall under this mandate.

With the adoption of final regulations by the Treasury Department and the IRS, the IRS has established most of the new framework for the regulation of registered tax return preparers. These regulations cover everything from the definition of a tax return preparer to best practices for tax advisors. As for continuing education requirements, the new annual education requirement will consist of two hours of ethics or professional conduct, three hours of federal tax-law updates and 10 hours of federal tax-law topics and must be taken from a qualified continuing education provider. And that is where NASBA and the National Registry of CPE Sponsors play a part.

Under the new regulations, a continuing education provider must fall into one of the following four categories:

  • Be an accredited educational institution;
  • Be recognized for continuing education purposes by the licensing body of any U.S. jurisdiction;
  • Be recognized and approved by an accrediting organization; or
  • Be recognized and approved by the IRS.

Great News for National Registry Sponsors

All members of the National Registry of CPE Sponsors qualify as continuing education providers because they are recognized by NASBA’s state boards of accountancy. As such, sponsors will be required to complete an abbreviated registration process with the IRS in order to obtain a continuing education provider number, but will not be required to complete a separate approval process.

NASBA Provides Recommendations and Comments to IRS

The IRS has yet to nail down some specific details regarding who will be considered an accrediting organization or how the process to be recognized and approved by the IRS will work; but the IRS has solicited comments on these topics. In response to the IRS’ Notice 2011-61 requesting feedback, NASBA provided commentary highlighting the experience and expertise of its National Registry of CPE Sponsors. Launched in 1990, the National Registry lists providers who meet standards recognized and jointly developed by NASBA, its member state boards of accountancy and the American Institute of Certified Public Accountants (AICPA).

This education component is where NASBA and the IRS intersect, and so NASBA has offered commentary on how we think they can best implement this requirement in such a short window.

The commentary the IRS asked for is on how the approval process should work. NASBA responded because it is in the business of approving continuing education providers on behalf of state boards, and so it is in the position to give the IRS very good guidance. NASBA’s been in this arena for a long time, and wanted to share what we’ve learned.

In addition, a key thrust of NASBA’s comments concern the need to have not only a quality approval process, but also high-quality standards for providers to meet. NASBA feels that a strong foundation of standards will be the linchpin of the IRS’ new regulatory structure for both providers and preparers, because they will give a framework for measuring quality.

NASBA’s recommendation to the IRS is that if they are going to allow other entities to credential education providers, those entities need to have high-quality standards by which they measure their providers and those standards need to be created with some outside oversight. At NASBA, we have a great framework in our Statement on Standards for CPE Programs. The state boards require that, and they rely on NASBA to create them through a joint process with the AICPA, administer them, update them and enforce them.

Since the IRS wants to begin requiring continuing education by January 1, 2012, it will be moving quickly. The agency has stated that it believes there are between 2,200 and 3,000 providers who could participate in this effort. NASBA is recommending that it have providers approved by October 1st in order to meet that start-up date, and that its Registry members be in that inaugural class.

NASBA can provide critical mass to the IRS return preparer program. We have 1,700 providers on our Registry, and those would be providers the IRS would only have to register, not approve. That would allow them to move through the process very quickly, and allow the providers time to create programming and be ready to go by January 1st.

> Read the Comment Letter