rp-14-42.pdf

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ANNUAL FILING SEASON PROGRAM

Rev. Proc. 2014-42

SECTION 1. PURPOSE
This revenue procedure provides guidance regarding a new, voluntary Annual
Filing Season Program designed to encourage tax return preparers who are not
attorneys, certified public accountants (CPAs), or enrolled agents (EAs) to complete
continuing education courses for the purpose of increasing their knowledge of the law
relevant to federal tax returns. In addition, this revenue procedure modifies and
supersedes Revenue Procedure 81-38, 1981-2 C.B. 592, regarding limited practice
before the IRS by individuals who are not attorneys, CPAs, or EAs.
SECTION 2. BACKGROUND
The accuracy of tax return preparation is essential to effective tax administration.
More than half of the United States’ taxpayers rely on paid tax return preparers to assist
them in preparing their federal tax returns annually. While 40% of paid tax return
preparers are credentialed as attorneys, CPAs, or EAs, most of the other 60% of paid
tax return preparers lack any kind of professional credential or license. Basic
competency for paid tax return preparers is essential to accurate return preparation,
improved tax compliance, effective tax administration, and protecting taxpayers from
preparer errors.
To further these goals, in 2011 the Treasury Department and the IRS published

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regulations under 31 U.S.C. § 330 (which are reprinted in Treasury Department Circular
No. 230 (Circular 230)) that established registered tax return preparers (RTRPs) as a
new category of practitioner and prohibited an individual who was not an attorney, CPA,
EA, or RTRP from preparing tax returns for compensation. Circular 230 also set forth
the requirements for RTRPs, which included passing a minimum competency
examination and completing continuing education annually. Under these regulations,
RTRPs were permitted to engage in limited practice by representing taxpayers before
the IRS during an examination with respect to tax returns and claims for refund that the
RTRP prepared and signed. At the same time, provisions in Circular 230 allowing any
unenrolled or unlicensed tax return preparer to engage in limited practice by
representing taxpayers during an examination of a return prepared and signed by the
tax return preparer were removed.
In February 2014, the D.C. Circuit Court of Appeals in Loving v. IRS, 742 F.3d
1013 (D.C. Cir. 2014), held invalid the portion of Circular 230 regulating RTRPs as
practitioners practicing before the IRS. Accordingly, the RTRP program is no longer in
effect. In the Fiscal Year 2015 Budget, the Administration proposed that Congress
provide the Treasury Department and the IRS with legislative authority to regulate tax
return preparers. See General Explanations of the Administration’s Fiscal Year 2015
Revenue Proposals. Until legislation is enacted, the Treasury Department and the IRS
have established an Annual Filing Season Program designed to encourage tax return
preparers who are not attorneys, CPAs, or EAs to improve their knowledge of federal
tax law. An unenrolled tax return preparer who successfully completes continuing

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education courses related to federal tax law will generally have a better understanding
of the tax law necessary to represent a taxpayer before the IRS during an examination
than an unenrolled individual who has not taken any continuing education courses
related to federal tax law. Accordingly, this revenue procedure also modifies and
supersedes Revenue Procedure 81-38, and in its place provides rules permitting
unenrolled tax return preparers who have an Annual Filing Season Program Record of
Completion to represent taxpayers during examination in certain limited circumstances.
SECTION 3. SCOPE.
The Annual Filing Season Program described in this revenue procedure is
voluntary and no tax return preparer is required to participate. Further, any individual
may apply for and receive an Annual Filing Season Program Record of Completion if he
or she meets the requirements of this revenue procedure.
This revenue procedure does not restrict any individual from preparing and
signing tax returns and claims for refund nor does it change the requirement that paid
tax return preparers must obtain a Preparer Tax Identification Number (PTIN). See
Treas. Reg. § 1.6109-2.
An Annual Filing Season Program Record of Completion is not required for an
attorney, CPA, EA, enrolled actuary, or enrolled retirement plan agent to represent
taxpayers before the IRS as described in section 10.3 of Circular 230. This revenue
procedure does not in any way affect or limit the ability of attorneys, CPAs, or EAs to
represent taxpayers before the IRS. The rules governing the practice of such persons
before the IRS are set forth in Circular 230.

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SECTION 4. ANNUAL FILING SEASON PROGRAM

.01 In general. An application for the Annual Filing Season Program must be
made in accordance with this revenue procedure and the requirements set forth by the
IRS in forms, instructions, or other appropriate guidance. An application for the Annual
Filing Season Program will not be considered if the applicant does not comply with the
requirements of this section.
.02 Record of Completion. Upon verification that the requirements in section 4 of
this revenue procedure have been met, the IRS will issue a Record of Completion to the
applicant. The Record of Completion is valid only with respect to tax returns or claims
for refund prepared and signed during the calendar year for which the Record of
Completion is issued.
.03 Form of application. Applicants must apply for the Annual Filing Season
Program by using the online PTIN application system or on paper, using the IRS Form
W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal (or
successor form), as prescribed by the form’s instructions. The applicant must sign the
application under penalties of perjury and include any required supporting information
and documentation required by forms, instructions, or other appropriate guidance.
Applications must be received by April 15 of the year for which the Record of
Completion is sought, and no applications received after that date will be considered.
.04 Period of applicability. The Record of Completion is effective for one
calendar year. Once issued, the Record of Completion is effective for tax returns and
claims for refund prepared and signed from the later of January 1 of the year covered by

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the Record of Completion or the date the Record of Completion is issued until
December 31 of that year. For example, if an application is submitted on February 15,
2015, and a Record of Completion is issued on February 25, 2015, the tax return
preparer’s 2015 Record of Completion will be effective for tax returns and claims for
refund prepared and signed from February 25, 2015 through December 31, 2015.
.05 Application requirements.
(1) PTIN. Applicants must be eligible for and obtain a PTIN, or timely
renew their existing PTIN, in accordance with the requirements of Treas. Reg. § 1.6109-
2. The PTIN must be valid for the year for which the Record of Completion is sought.
(2) Federal tax filing season refresher course.
(a) Requirement. Only applicants who successfully complete an
annual federal tax filing season refresher course (refresher course) that is administered
by an IRS-approved continuing education provider (described in section 5 of this
revenue procedure) are eligible to participate in the Annual Filing Season Program. The
refresher course must generally cover tax law and filing requirements relevant to Form
1040 series returns and schedules. The refresher course must be 6 hours and must
include a test of the material presented during the course that is given at the end of the
course. The test must be a minimum of 100 questions. To successfully complete the
refresher course, the applicant must pass the related test by answering 70% of the
questions correctly (or a higher percentage if set forth in forms, instructions, or other
appropriate guidance).
(b) Exceptions. The following applicants are not required to take the

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refresher course as a condition of eligibility to apply for a Record of Completion:
(i) Attorneys, CPAs, and EAs described in section 10.3 of
Circular 230;
(ii) Individuals who passed the RTRP examination; and
(iii) Tax return preparers who are licensed or registered by
any state, territory, or possession of the United States, including a Commonwealth, or
the District of Columbia after passing an examination covering federal tax matters, and
tax return preparers who have passed an examination covering federal tax matters
administered by an entity recognized by the IRS as an eligible entity for purposes of this
section. A list of states and other entities recognized by the IRS as offering an
examination that qualifies for purposes of this exception will be posted on IRS.gov.
Applicants who qualify for this exception must, upon request, present proof of their
license, registration, or passage of an approved examination as required by the IRS in
forms, instructions, or other appropriate guidance.
(3) Continuing education.
(a) Applicants required to complete the refresher course.
Applicants required to complete the refresher course must successfully complete 18
hours of continuing education from an IRS-approved continuing education provider
(described in section 5 of this revenue procedure) during the calendar year prior to the
year for which the Record of Completion is sought. The total hours completed must
consist of 2 hours of ethics or professional responsibility, 10 hours of federal tax law
topics, and 6 hours of federal tax law updates. For example, to receive a Record of

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Completion that will be effective for tax returns and claims for refund prepared and
signed during the 2016 calendar year, an applicant must have completed 18 hours of
continuing education meeting the requirements of this section 4.05(3) during the 2015
calendar year. Applicants who successfully complete the refresher course described in
section 4.05(2) will have satisfied the requirement to take 6 hours of federal tax law
updates.
(b) Applicants exempt from the refresher course. Applicants
exempt from the refresher course must successfully complete 15 hours of continuing
education from an IRS-approved continuing education provider during the calendar year
prior to the year for which the Record of Completion is sought. The total hours
completed must consist of 2 hours of ethics or professional responsibility, 10 hours of
federal tax law topics, and 3 hours of federal tax law updates.
(c) Transition rule. Applicants for the Annual Filing Season
Program for the 2015 calendar year are required to complete 11 hours of continuing
education during 2014. For applicants who must complete the refresher course, the
refresher course will satisfy 6 hours of the 11-hour requirement; the other 5 hours must
consist of 3 hours of federal tax law topics and 2 hours of ethics or professional
responsibility. Applicants not required to take the refresher course must complete 8
hours of continuing education consisting of 3 hours of federal tax law updates, 3 hours
of federal tax law topics, and 2 hours of ethics or professional responsibility.
(4) Consent to be subject to duties and restrictions of Circular 230. As a
prerequisite to participation in the Annual Filing Season Program and receiving a

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Record of Completion, an applicant must consent to be subject to the duties and
restrictions relating to practice before the IRS in subpart B and section 10.51 of Circular
230 for the entire period covered by the Record of Completion.
.06 Restrictions on eligibility.
(1) Ineligible individuals. The following individuals are ineligible to
participate in the Annual Filing Season Program:
(a) An individual who is disbarred, suspended, or disqualified from
practice before the IRS under Circular 230, during the period for which the individual is
disbarred, suspended, or disqualified.
(b) An individual who has been convicted of a felony involving a
financial matter, tax matter, or other violation of the public trust within the 5-year period
preceding the date of the application to participate in the Annual Filing Season Program.
(c) An individual who is enjoined from representing persons before
the IRS, preparing tax returns, or engaging in other conduct subject to injunction under
section 7407, for the time period during which the injunction is in effect.
(d) An individual who engaged in misconduct that would have
violated Circular 230 if the individual were subject to Circular 230, including knowingly
providing false or misleading information, or participating in providing false or
misleading information, to the IRS.
(e) An individual who is not in compliance with his or her personal
federal tax obligations (including employment taxes for which the applicant is personally
liable), for the period of such non-compliance. The fact that the applicant is in a dispute

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with the IRS regarding a federal tax liability or has entered into an installment
agreement (which is not in default), an offer-in-compromise, or both to satisfy a federal
tax liability will not be treated as non-compliant with a personal federal tax obligation for
purposes of this section.
(f) An individual who has his or her Annual Filing Season Program
Record of Completion revoked under section 7 of this revenue procedure, for the period
that the IRS determines, based on the facts and circumstances, that such individual is
ineligible.
(g) An individual who does not comply with the requirements of this
revenue procedure.
.07 Solicitation restrictions. A tax return preparer who receives a Record of
Completion may not use the term “certified,” “enrolled,” or “licensed” to describe this
designation or in any way imply an employer/employee relationship with the IRS or
make representations that the IRS has endorsed the tax return preparer. A tax return
preparer who receives a Record of Completion for a calendar year may represent that
the tax return preparer holds a valid Annual Filing Season Program Record of
Completion for that calendar year and that he or she has complied with the IRS
requirements for receiving the Record of Completion.
SECTION 5. APPROVED CONTINUING EDUCATION PROVIDERS
The refresher course and other continuing education requirements described in
section 4 must be administered by continuing education providers defined in section
10.9 of Circular 230 and approved by the IRS in accordance with the requirements of

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Revenue Procedure 2012-12, 2012-2 I.R.B. 275, and as prescribed in forms,
instructions, or other appropriate guidance.
SECTION 6. REPRESENTATION BEFORE THE IRS BASED ON PREPARING AND
SIGNING A RETURN

.01 Representation of taxpayers before the IRS. This section permits unenrolled
tax return preparers who obtain a Record of Completion to represent taxpayers before
the IRS during an examination of a tax return or claim for refund that they prepared and
signed (or prepared if there is no signature space on the form), provided the individual
(1) had a valid Annual Filing Season Program Record of Completion for the calendar
year in which the tax return or claim for refund was prepared and signed; and (2) has a
valid Annual Filing Season Program Record of Completion for the year or years in which
the representation occurs. The representation permitted under this section does not
permit an individual who has a Record of Completion to represent the taxpayer before
appeals officers, revenue officers, Counsel, or similar officers or employees of the IRS.
.02 Modification and Superseding of Revenue Procedure 81-38. Revenue
Procedure 81-38 allows an unenrolled tax return preparer to represent a taxpayer
during an examination if the tax return preparer prepared and signed the taxpayer’s
return that is under examination (or prepared the taxpayer’s return that is under
examination if there is no signature space on the form).
Revenue Procedure 81-38 is modified and superseded for tax returns and claims
for refund prepared and signed (or prepared if there is no signature space on the form)
after December 31, 2015. Unenrolled tax return preparers may not rely on Revenue

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Procedure 81-38 to represent taxpayers during an examination of a tax return or claim
for refund prepared or signed after December 31, 2015. However, unenrolled tax return
preparers may rely on Revenue Procedure 81-38 to represent taxpayers during an
examination of a tax return or claim for refund prepared and signed (or prepared if there
is no signature space on the form) on or before December 31, 2015.
.03 Compliance with Circular 230. Representation of a taxpayer before the IRS
under the authority of this section is governed by Circular 230.
SECTION 7. REVOCATION AND PROTEST
.01 Revocation.
(1) Individuals who fail to comply with the duties and restrictions relating to
practice before the IRS in subpart B and section 10.51 of Circular 230 or with any of the
requirements described in this revenue procedure will have their Record of Completion
revoked and may be prohibited from participating in the Annual Filing Season Program
in the future based on the facts and circumstances, including the act that resulted in the
noncompliance.
(2) Individuals who represent a taxpayer under the authority of section
6.01 of this revenue procedure who violate Circular 230 during the course of that
representation will have their Record of Completion and ability to represent a taxpayer
before the IRS under this revenue procedure revoked and other sanctions may be
imposed.
.02 Protest.
(1) Prior to any revocation of a Record of Completion pursuant to section

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7.01, an individual will be informed in writing of the reason(s) for revocation. The
individual may, within 30 days after the date of the IRS notice of revocation, file a written
protest, as prescribed by the IRS in forms, instructions, or other appropriate guidance,
to demonstrate why the Record of Completion should not be revoked. If an individual’s
Record of Completion is revoked, the revocation is effective for the entire calendar year
for which the Record of Completion would have been valid had the revocation not
occurred.
(2) An individual who has been determined to be ineligible to participate in
the Annual Filing Season Program under section 4.06 of this revenue procedure may,
within 30 days after the date of the IRS notice of ineligibility, file a written protest, as
prescribed by the IRS in forms, instructions, or other appropriate guidance, to
demonstrate why the individual is not ineligible to participate in the Annual Filing
Season Program.
SECTION 8. EFFECT ON OTHER DOCUMENTS
Revenue Procedure 81-38 is modified and superseded for tax returns and claims
for refund prepared and signed (or prepared if there is no signature space on the form)
after December 31, 2015.
SECTION 9. EFFECTIVE DATE
Except for section 6, this revenue procedure is effective as of June 30, 2014.
Section 6 is effective for tax returns and claims for refund prepared and signed (or
prepared if there is no signature space on the form) after December 31, 2015.

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SECTION 10. DRAFTING INFORMATION
The principal author of this revenue procedure is Hollie M. Marx of the Office of
the Associate Chief Counsel (Procedure and Administration). For further information
regarding this revenue procedure contact Hollie M. Marx on (202) 317-6844 (not a toll
free call).