WASHINGTON  D.C. - The Internal Revenue Service has proposed major regulations of the tax preparation business, but would exempt  attorneys, CPAs and Enrolled Agents from competency tests and new continuing education requirements. However, all paid preparers would be required to register with the IRS and receive a preparer tax identification number and be subject to a limited tax compliance check. The requirements do not take effect this year and would be rolled out over several years. IRS Commissioner Doug Shulman revealed the proposals today based on the results of a six-month Return Preparer Review. Besides requiring registration for all paid preparers, the IRS also would check to ensure they have filed federal personal, employment and business tax returns and paid any moneys due.

The major new steps would impact attorneys, CPAs and EAs who are active and in good standing with licensing agencies and exempt these groups and others who already are subject to continuing education requirements.

However, other non-credentialed preparers would have to take the competency tests and complete continuing education requirements. They would also be subject to the same ethical rules as attorneys, CPAs and EAs, which are found in Treasury Department Circular 230. The IRS said this would let it suspect or discipline preparers who engage in unethical or disreputable conduct.