If you paid someone to prepare your tax return and that preparer didn't obtain a Preparer Tax Identification Number (PTIN) by last Dec. 31, you may receive a letter from the Internal Revenue Service.

In 2010, the IRS released its findings and recommendations regarding the tax-preparer industry. In 2011, the first provision of the new regulation went into effect and required all paid tax preparers to be registered with the IRS and to use the assigned PTIN when filing 2010 tax returns for their clients. For the tax-return preparers, this meant they could no longer use their Social Security number when signing a tax return.

Prior to the new regulations, the IRS only held jurisdiction over enrolled agents (EAs), CPAs, and attorneys, and they couldn't regulate the conduct of return preparers who didn't hold a professional designation.

Since the new initiative, the IRS has registered about 712,000 preparers who weren't previously under the agency's jurisdiction. However, even with the success of the large number of preparers who complied and registered with the IRS, about 100,000 unregistered return preparers filed returns for taxpayers during the 2010 filing season.

The IRS is assuming these tax preparers weren't aware of the new requirements and that they're in the process of sending letters to provide the information necessary to complete the registration process. It plans to send letters to people who had their returns prepared by someone who signed the return but wasn't properly registered.

Doug Shulman, IRS commissioner, said, "We owe it to the compliant tax preparers to make sure that everyone is on a level playing field." As the ranks of registered tax return preparers grow, there is some concern in the marketplace that this newly created RTRP acronym will cause confusion for the taxpayers when trying to select a qualified preparer.

The IRS has issued guidance to help prevent inaccurate promotion by those who pass only a minimal competency test on individual tax returns. Taxpayers need to have information to distinguish the different representation authority between EAs CPAs, tax attorneys, and the newly registered RTRPs.

With the release of the new Circular 230 (Regulations Governing Practice before the Internal Revenue Service), all tax-return preparers now fall under the guidance of the federal Office of Professional Responsibility. OPR has the responsibility for matters relating to ethical conduct, disciplinary proceedings and sanctions, and administering competency testing and continuing education requirements.

All tax-return preparers are required to register with the IRS, and this fall the second provision of the new regulations takes effect. The estimated 812,000 return preparers who weren't previously under IRS jurisdiction must pass a test demonstrating basic knowledge of Form 1040 covering filing status, taxable income, and basic deductions.

The IRS says it doesn't expect to test RTRPs on more complicated tax issues or on business returns. OPR has made it clear that return preparers can't state to the public they are registered tax return preparers (RTRPs or RTPs) until they've passed the test.

Under the original plan, the IRS was expected to allow a three-year testing grace period for return preparers who received a provisional PTIN before the end of 2010, while requiring people who didn't register by the end of last year to pass the basic competency test before receiving their PTIN. That plan since has been modified, with the IRS is extending the date for provisional PTINs through April 18, 2012. Once the IRS stops issuing provisional PTINs, tax-return preparers will be required to complete the competency test and suitability requirements successfully before obtaining a PTIN.

The IRS also is proposing that preparers with provisional PTINs be subject to fingerprinting. All preparers, including EAs, CPAs, and tax attorneys, are subject to suitability questions asked on the PTIN application, such as whether they have been convicted of a felony in the previous 10 years and whether they have filed their personal and business tax returns.

Once the test has been completed, this new group of tax-return preparers will be required to complete 15 hours of continuing education per year—less than is required of EAs, CPAs, and tax attorneys—on federal tax, tax updates, and ethics before renewing their PTINs.

Compliance is a central part of the new tax-return preparer initiative, and letters to unregistered tax preparers and taxpayers who hired the services of unregistered tax preparers are one step in an ongoing compliance effort to ensure tax-return preparers are following the new regulations. The IRS is also working to identify tax-return preparers who make repeated errors. PTINs provide a means to accomplish this tracking. Agency personnel also are conducting on-site meetings and surprise visits.

In the end, it is still the taxpayer's responsibility to confirm that all information reported on the tax return is correct. There's no magic number the IRS accepts for charitable contributions or business expenses, and taxpayers should be alarmed if a tax preparer states they can guarantee a tax refund.

Starting in 2012 the IRS will mandate all preparers who file more than 10 client returns to do so electronically. The taxpayer is required to maintain a copy of the return, and all documents proving income and deductions in either paper or electronic version. Confirm the return has the preparer's name, address, and PTIN.