n-11-06.pdf

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Part III – Administrative, Procedural, and Miscellaneous

Implementation of Rules Governing Tax Return Preparers

Notice 2011-6

Purpose

This notice provides guidance regarding the implementation of new Treasury
regulations governing tax return preparers. Section 1 of this notice provides guidance
regarding the requirement to obtain a preparer tax identification number (PTIN) under
section 1.6109-2 and identifies the forms that qualify as tax returns or claims for refund
for purposes of those regulations. Section 2 of this notice provides interim rules
applicable to certain PTIN holders during the implementation phase of the new
regulations governing tax return preparers.
Background
The IRS made findings and recommendations in Publication 4832, “Return
Preparer Review,” which was published on January 4, 2010, concerning the results of
an in-depth review of the tax return preparer industry. The IRS recommended
increased oversight of tax return preparers through the issuance of regulations
governing tax return preparers. The IRS published: (1) final regulations (75 FR 60309)
addressing tax return preparer PTIN requirements on September 30, 2010; (2) final
regulations (75 FR 60316) regarding the user fee to apply for or renew a PTIN on

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September 30, 2010; and (3) proposed regulations (REG-138637-07) addressing
competency testing requirements, continuing education requirements, and extension of
the ethics rules under 31 CFR Part 10 (reprinted in Treasury Department Circular 230
(Circular 230)) for tax return preparers on August 23, 2010.
Section 1. Guidance under section 1.6109-2
.01 PTINs Obtained After September 28, 2010
Section 1.6109-2 provides that beginning after December 31, 2010, all tax return
preparers must have a PTIN that was applied for and received at the time and in the
manner as prescribed by the IRS. This notice confirms that tax return preparers who
obtain a PTIN or a provisional PTIN and pay any applicable user fee after September
28, 2010, have applied for and received a PTIN in the manner prescribed by the IRS for
purposes of the section 6109 regulations.
.02 Individuals Who May Obtain a PTIN
Section 1.6109-2(d) provides that for returns or claims for refund filed after
December 31, 2010, the identifying number of a tax return preparer is the individual’s
PTIN or other number prescribed by the IRS. Additionally, after December 31, 2010, all
individuals who are compensated for preparing, or assisting in the preparation of, all or
substantially all of a tax return or claim for refund of tax must have a PTIN.
Section 1.6109-2(d) also provides that, except as provided in paragraph (h),
beginning after December 31, 2010, a tax return preparer must be an attorney, certified
public accountant, enrolled agent, or registered tax return preparer to obtain a PTIN.
Section 1.6109-2(h) provides that the IRS may prescribe exceptions to the PTIN rules in

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appropriate guidance, including the requirement that an individual be an attorney,
certified public accountant, enrolled agent, or registered tax return preparer before
receiving a PTIN.
The IRS has decided to allow certain individuals who are not attorneys, certified
public accountants, enrolled agents, or registered tax return preparers to obtain a PTIN
and prepare, or assist in the preparation of, all or substantially all of a tax return in
certain discrete circumstances.
a. Tax Return Preparers Supervised by Attorneys, Certified Public
Accountants, Enrolled Agents, Enrolled Retirement Plan Agents,
and Enrolled Actuaries
Until further guidance is issued, the IRS, in accordance with the authority to
provide exceptions to the PTIN rules under section 1.6109-2(h), will permit any
individual eighteen years or older to pay the applicable user fee and obtain a PTIN
permitting the individual to prepare, or assist in the preparation of, all or substantially all
of a tax return or claim for refund for compensation if:
(i) the individual is supervised by an attorney, certified public accountant, enrolled
agent, enrolled retirement plan agent, or enrolled actuary authorized to practice before
the IRS under Circular 230 §10.3(a) through (e);
(ii) the supervising attorney, certified public accountant, enrolled agent, enrolled
retirement plan agent, or enrolled actuary signs the tax returns or claims for refund
prepared by the individual;
(iii) the individual is employed at the law firm, certified public accounting firm, or
other recognized firm of the tax return preparer who signs the tax return or claim for

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refund; and
(iv) the individual passes the requisite tax compliance check and suitability check
(when available).
For purposes of this provision, a law firm
is a law partnership, professional
corporation, sole proprietorship, or any other association authorized to practice law in
any state, territory, or possession of the United States, including a Commonwealth, or
the District of Columbia. A certified public accounting firm is a partnership, professional
corporation, sole proprietorship, or any other association that is registered, permitted, or
licensed to practice as a certified public accounting firm in any state, territory, or
possession of the United States, including a Commonwealth, or the District of Columbia.
A recognized firm
is a partnership, professional corporation, sole proprietorship, or any
other association, other than a law firm or certified public accounting firm, that has one
or more employees lawfully engaged in practice before the IRS and that is 80 percent or
a greater percent owned by one or more attorneys, certified public accountants, enrolled
agents, enrolled actuaries, or enrolled retirement plan agents authorized to practice
before the IRS under sections 10.3(a) through (e) of Circular 230, respectively.
Individuals applying for a PTIN under this provision will be required to certify on
the PTIN application that they are supervised by an attorney, certified public accountant,
enrolled agent, enrolled retirement plan agent, or enrolled actuary who signs the tax
return or claim for refund prepared by the individual and provide a supervising
individual’s PTIN or other number if prescribed by the IRS. If at any point the individual
is no longer supervised by the signing attorney, certified public accountant, enrolled

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agent, enrolled retirement plan agent, or enrolled actuary, the individual must notify the
IRS as prescribed in forms, instructions, or other appropriate guidance and will not be
permitted to prepare, or assist in preparing, all or substantially all of a tax return or claim
for refund for compensation under this provision.
Individuals who obtain a PTIN under this provision and prepare, or assist in
preparing, all or substantially all of a tax return or claim for refund for compensation will
not be subject to a competency examination or continuing education requirements.
These individuals, however, may not
sign any tax return they prepare or assist in
preparing for compensation, represent taxpayers before the IRS in any capacity, or
represent to the IRS, their clients, or the general public that they are a registered tax
return preparer or a Circular 230 practitioner.
Although individuals who obtain a PTIN under this provision are not practitioners
under Circular 230, they are, by preparing, or assisting in the preparation of, a tax return
for compensation, acknowledging that they are subject to the duties and restrictions
relating to practice in subpart B of Circular 230. The IRS may, by written notification,
revoke a PTIN obtained under this provision if the tax return preparer willfully violates
applicable duties and restrictions prescribed in Circular 230 or engages in disreputable
conduct. The tax return preparer may, within 30 days after receipt of the notice of
revocation of the PTIN, file a written protest of the notice of revocation as prescribed in
the revocation notice. A protest is not a proceeding under subpart D of Circular 230.
b. Individuals Who Prepare Tax Returns Not Covered by the
Registered Tax Return Preparer Competency Examination(s)

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The Treasury Department and the IRS have proposed rules that will require an
individual to pass a registered tax return preparer minimum competency examination
(competency examination). The IRS anticipates, however, that the tax returns and
claims for refund covered by the competency examination(s) initially offered will be
limited to individual income tax returns (Form 1040 series tax returns and
accompanying schedules). Although the IRS anticipates the types of returns and claims
for refunds covered by the competency examination(s) may expand in the future, the
IRS recognizes that certain compensated tax return preparers do not prepare Form
1040 series tax returns or related claims for refunds and that the tax returns and claims
for refunds prepared by some of these individuals may not be covered by the
competency examinations for a significant period of time. The IRS has determined that
individuals should not be required, as a condition to obtaining a PTIN, to pass a
competency examination covering tax returns and claims for refunds not prepared by
the individual. Therefore, until further guidance, this notice, in accordance with the
authority under section 1.6109-2(h), provides that any individual eighteen years or older
may pay the applicable user fee and obtain a PTIN if:
(i) the individual certifies that the individual does not prepare, or assist in the
preparation of, all or substantially all of any tax return or claim for refund covered by the
competency examination(s) for registered tax return preparers administered under IRS
oversight (1040 series until further notice); and
(ii) the individual passes the requisite tax compliance check and suitability check
(when available).

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Individuals who obtain a PTIN under this provision and prepare, or assist in
preparing, all or substantially all of a tax return or claim for refund for compensation will
not yet be subject to a competency examination. These individuals are not currently
required to satisfy the same continuing education requirements that a registered tax
return preparer must complete to renew their PTIN. In the future, the IRS may require
through forms, instructions, or other appropriate guidance that these individuals
complete continuing education to renew their PTIN.
Individuals who obtain or renew a PTIN under this provision may sign the tax
returns or claims for refunds that they prepare for compensation as the paid preparer.
These individuals may also represent taxpayers before revenue agents, customer
service representatives, or similar officers and employees of the IRS (including the
Taxpayer Advocate Service) during an examination if the individual signed the tax return
or claim for refund for the taxable year under examination. They may not, however,
represent to the IRS, their clients, or the general public that they are a registered tax
return preparer or a Circular 230 practitioner. Enrolled retirement plan agents and
enrolled actuaries who obtain a PTIN under this provision may continue to practice and
represent as provided in Circular 230.
Although individuals who obtain a PTIN under this provision are not practitioners
under Circular 230, they are, by preparing, or assisting in the preparation of, a tax return
for compensation, acknowledging that they are subject to the duties and restrictions
relating to practice in subpart B of Circular 230. The IRS may, by written notification,
revoke a PTIN obtained under this provision if the tax return preparer willfully violates

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applicable duties and restrictions prescribed in Circular 230 or engages in disreputable
conduct. The tax return preparer may, within 30 days after receipt of the notice of
revocation of the PTIN, file a written protest of the notice of revocation as prescribed in
the revocation notice. A protest is not a proceeding under subpart D of Circular 230.
.03 Forms Requiring a PTIN
Section 1.6109-2(h) provides that the IRS may specify in appropriate guidance
the returns, schedules, and other forms that qualify as tax returns or claims for refund
for purposes of the PTIN regulations. Consistent with that authority, the IRS hereby
specifies that all tax returns, claims for refund, or other tax forms submitted to the IRS
are considered tax returns or claims for refund for purposes of section 1.6109-2 unless
otherwise provided by the IRS. For purposes of this provision, the term tax forms is
interpreted broadly. An individual must obtain a PTIN to prepare for compensation all or
substantially all of any form except those specifically identified by the IRS as not subject
to the requirements of §1.6109-2. At this time, the IRS identifies the following forms as
not subject to the requirements of §1.6109-2:
Form SS-4, Application for Employer Identification Number;
Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes
and Income Tax Withholding;
Form SS-16, Certificate of Election of Coverage under FICA;
Form W-2 series of returns;
Form W-7, Application for IRS Individual Taxpayer Identification Number;
Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding;
Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax
and Acceptance of Overassessment;
Form 872, Consent to Extend the Time to Assess Tax;
Form 906, Closing Agreement On Final Determination Covering Specific Matters;
Form 1098 series;

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Form 1099 series;
Form 2848, Power of Attorney and Declaration of Representative;
Form 3115, Application for Change in Accounting Method;
Form 4029, Application for Exemption From Social Security and Medicare Taxes and
Waiver of Benefits;
Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers,
Members of Religious Orders and Christian Science Practitioners;
Form 4419, Application for Filing Information Returns Electronically;
Form 5300, Application for Determination for Employee Benefit Plan;
Form 5307, Application for Determination for Adopters of Master or Prototype or Volume
Submitter Plans;
Form 5310, Application for Determination for Terminating Plan;
Form 5500 series;
Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips;
Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S.
Real Property Interests;
Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign
Persons of U.S. Real Property Interests;
Form 8508, Request for Waiver From Filing Information Returns Electronically;
Form 8717 User Fee for Employee Plan Determination, Opinion, and Advisory Letter
Request;
Form 8809, Application for Extension of Time to File Information Return;
Form 8821, Tax Information Authorization;
Form 8942, Application for Certification of Qualified Investments Eligible for Credits and
Grants Under the Qualifying Therapeutic Discovery Project Program

The IRS may in future guidance modify the list of documents that do not qualify
as tax returns or claims for refund for purposes of section 1.6109-2(h).
Section 2. Interim Rules
.01 Provisional PTINs
As discussed in section 1 of this notice, an individual may be designated as a
registered tax return preparer if the individual successfully completes a competency
examination or otherwise meets requisite standards prescribed by the IRS. The IRS,
however, does not expect to offer the competency examination before mid 2011.
Therefore, to allow tax return preparers to obtain a PTIN and continue to prepare tax

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returns or claims for refund until the competency examination is available, the IRS, as
an interim rule, will allow individuals who are not attorneys, certified public accountants,
or enrolled agents to obtain a provisional PTIN before the date that the competency
examination is first offered (“initial test offering date”).

Individuals may obtain a
provisional PTIN through the IRS’ new online PTIN application system or by submitting
to the IRS a paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN)
Application. The individual must annually renew the provisional PTIN and pay the
applicable user fee.
The IRS generally will not issue provisional PTINs in accordance with this
provision after the initial test offering date. After the initial test offering date, only
attorneys, certified public accountants, enrolled agents, and registered tax return
preparers, or individuals defined in section 1.02(a) or (b) of this notice will be eligible to
obtain a PTIN in accordance with section 1.6109-2, subject to any future IRS guidance
identifying additional individuals who may obtain a PTIN.
Until December 31, 2013, a provisional PTIN may be renewed upon proper
application and payment of the applicable user fee, even if the individual holding the
provisional PTIN is not an attorney, certified public accountant, enrolled agent, or
registered tax return preparer. After December 31, 2013, provisional PTINs generally
will not be renewed, and the holder of a provisional PTIN obtained in accordance with
this provision may keep the PTIN only if the holder of the provisional PTIN is eligible to
obtain a PTIN in accordance with section 1.6109-2, section 1.02(a) or (b) of this notice,
or future guidance.

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.02 Return Preparation by Provisional PTIN Holders
Tax return preparers who properly obtain a provisional PTIN before the initial test
offering date will be permitted, subject to the requisite federal tax compliance check and
suitability check (when available), to prepare for compensation all or substantially all of
any tax return or claim for refund until December 31, 2013. During the transition period
from the initial test offering date through December 31, 2013, tax return preparers who
hold a provisional PTIN may, subject to the payment of the applicable user fee, take the
competency examination as often as the examination is offered.
These interim rules apply to those tax return preparers who obtain a provisional
PTIN prior to the initial test offering date. An individual who is subject to the
competency testing requirement for becoming a registered tax return preparer who does
not obtain a PTIN before the initial test offering date must pass the competency
examination and be designated as a registered tax return preparer to be permitted to
prepare for compensation all or substantially all of a tax return or claim for refund.
The holder of a provisional PTIN may represent that the holder is authorized to
practice before the IRS by preparing and filing tax returns or claims for refund, but the
holder of a provisional PTIN may not represent that the holder is a registered tax return
preparer or has passed the competency examination necessary to become a registered
tax return preparer.
.03 Practice Based on Return Preparation
The proposed Circular 230 regulations include registered tax return preparers in
the definition of individuals described as practitioners and authorize these individuals to

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practice before the IRS. Practice as a registered tax return preparer generally is limited
to preparing tax returns, claims for refund, or other documents for submission to the IRS
and to limited representation as described below. A registered tax return preparer may
prepare all or substantially all of a tax return or claim for refund. The IRS will prescribe
by forms, instructions, or other appropriate guidance the tax returns and claims for
refund that a registered tax return preparer may prepare and sign.
Registered tax return preparers may represent taxpayers before revenue agents,
customer service representatives, or similar officers and employees of the IRS during
an examination if the registered tax return preparer prepared and signed (or prepared
and was not required to sign) the tax return or claim for refund for the taxable period
under examination.
Prior to January 1, 2011, any individual generally may prepare a tax return or
claim for refund for compensation. An individual who prepares and signs a taxpayer’s
return or claim for refund as the preparer generally may represent that taxpayer during
an examination of the taxable period covered by that return or claim for refund. The
proposed Circular 230 regulations generally do not extend this right of representation to
individuals who are not practitioners after December 31, 2010. To ensure that tax
return preparers have sufficient time to become registered tax return preparers, these
interim rules provide that an individual may represent a taxpayer during an examination
provided the individual prepared and signed the taxpayer’s return or claim for refund as
the preparer for the taxable period under examination and the individual was permitted
under the regulations or other published guidance to prepare the taxpayer’s return or

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claim for refund for compensation. This right to represent the taxpayer does not,
however, permit an individual who is not an attorney, certified public accountant,
enrolled agent, enrolled retirement plan agent, or enrolled actuary to represent the
taxpayer before appeals officers, revenue officers, Counsel, or similar officers or
employees of the IRS or the Department of Treasury.
.04 Continuing Education
The proposed Circular 230 regulations require registered tax return preparers to
complete fifteen hours of continuing education each registration year. As an interim
rule, there is no continuing education requirement for registered tax return preparers or
tax return preparers who obtain a provisional PTIN during the first year of registration,
which commenced on September 30, 2010.
.05 Ethics and Conduct
The proposed Circular 230 regulations include registered tax return preparers in
the definition of individuals described as practitioners and authorize these individuals to
practice before the IRS. Practice as a registered tax return preparer, therefore, will be
subject to applicable duties and restrictions relating to practice before the IRS under
Circular 230. Accordingly, as an interim rule, practice before the IRS by a tax return
preparer who obtains a provisional PTIN or any individual who for compensation
prepares, or assists in the preparation of, all or a substantial portion of a document
pertaining to any taxpayer’s tax liability for submission to the IRS also is subject to
applicable duties and restrictions relating to practice before the IRS under Circular 230.
Tax return preparers holding a provisional PTIN and other individuals who for

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compensation prepare, or assist in the preparation of, all or a substantial portion of a
document pertaining to any taxpayer’s tax liability for submission to the IRS must not
engage in disreputable conduct under section 10.51 of Circular 230. The IRS may, by
written notification, revoke a provisional PTIN if the tax return preparer willfully violates
applicable duties and restrictions prescribed in Circular 230 or engages in disreputable
conduct under section 10.51 of Circular 230. The tax return preparer may, within 30
days after receipt of the notice of revocation of the provisional PTIN, file a written
protest of the notice of revocation as prescribed in the revocation notice. A protest is
not a proceeding under subpart D of Circular 230.
The interim rules described in this notice and any final regulations apply to all tax
return preparers who prepare all or substantially all of a tax return or claim for refund for
compensation. As discussed in section 1 of this notice, all tax returns, claims for refund,
or other documents submitted to the IRS unless otherwise provided for in section 1 of
this notice or other guidance are tax returns for purposes of the PTIN regulations.
Contact Information
The principal author of this notice is Matthew D. Lucey of the Office of Associate
Chief Counsel (Procedure and Administration). For further information regarding this
notice contact Matthew D. Lucey on (202) 622-4940 (not a toll-free call).