CTEC - California Registered Tax Preparer (CRTP) CPE Requirements

How to reach the regulator directly.

California Tax Education Council (CTEC)
P.O. Box 2890
Sacramento, CA 95812-2890

Tel: (877) 850-2832
Fax: (877) 851-2832

Email: info@ctec.org

The regulator's own published rules and related resources.

California Tax Education Council (CTEC)

The total continuing education hours required.

20 hours annually.

The detailed rules behind that total -- category minimums, ethics, and other conditions.

Effective January 1, 2012: CTEC has revised the breakdown for the 20-hour annual CE requirement. It is now broken down as follows:

• Fifteen (15) federal tax law credits, including:
• Ten (10) "general" federal tax law credits;
• Three (3) federal tax law "update" credits; and
• Two (2) "ethics" credits.
• Five (5) state (California tax law credits)

Effective January 27, 2012: Courses Covering State Tax Law Issues – Generally, a program that covers state tax law issues will not qualify for IRS continuing education credit unless at least 80% of the program material consists of a comparison between federal and state tax laws.

Prior to January 1, 2012: The 20 hours of CTEC approved continuing education must include:

• 12 hours of federal taxation;
• 4 hours of California taxation;
• 2 hours of ethics; and
• 2 hours of either federal taxation or California taxation.

The other hours that apply to either federal or California taxation and may include the use of approved curriculum providers' income tax software, assembly of returns, and/or other procedures.

How the reporting cycle is structured.

Annual.

When a reporting cycle begins.

November 1.

How completed credits are reported to the regulator.

Background: Providers record and report to CTEC those students who successfully complete their CTEC approved courses. This information is used to confirm the successful completion of the educational requirements claimed by tax preparers when they register with CTEC. Tax preparers are required to provide CTEC with a list of CTEC-approved courses they have completed to register or renew their registration as a CTEC Registered Tax Preparer (CRTP). CTEC as part of the registration process must be able to validate an applicant’s course completion during the registration process.

• Provider Reporting Exemption: The Franchise Tax Board (FTB), the Internal Revenue Service (IRS), and California State Board of Equalization (BOA) are exempt from these reporting requirements (refer to "Method of Approval of CE Providers" below). However, to help CTEC maintain a high level of compliance with annual CE training requirements, these agencies are encouraged to comply with the reporting requirements.

Student Reporting Requirements:

When submitting a renewal application by mail, a preparer is required to attach a copy of their course completion certificate, which they received from the IRS, FTB or BOA, to their application. Credit will not be awarded without a course completion certificate. Copies of the course ad, etc. will not be accepted in lieu of a certificate of completion or attendance verification. The IRS, FTB and BOA provide CE verifications to meet the requirements of the IRS Director of Practice, NASBA, and State Boards of Accountancy requirements for all courses they present, and it is the student's responsibility to obtain and retain this documentation for registration purposes.

The renewal or reporting deadline.

The CPE period ends on October 31 annually.

The regular CRTP renewal period begins on August 1 and goes through October 31.

• November 2016: FAQ Taken from the CTEC website: What happens if I don't complete my continuing education and apply for a statement of compliance by October 31st? Your status will be changed to expired until you complete the required education and complete the renewal application. You will also need to pay a fee, (which includes your registration fee plus a late fee). Your status will remain expired until your application is processed by CTEC. Your bond may be canceled by your insurance/surety company and a tax preparer may not conduct business without a current surety bond.

Effective November 1, 2012: All CRTPs have until January 15th of each year to renew late. (e.g., CRTPs who failed to meet the October 31, 2012 renewal deadline only have until January 15, 2013 to renew.) CRTPs who do not renew by January 15 will have to start over, re-take the qualifying education course and register as a new CRTP. Information from the past CTEC registration (i.e., completed education, registration history and prior CTEC number) will not be transferred to the new registration.

Prior to this policy change, CRTPs had a one-year grace period to renew late. The focus of the new deadline is to improve compliance. CRTPs cannot prepare any tax returns for a fee until they have a current CTEC registration, which is why the CTEC Council decided to shorten the late renewal grace period from 12 months to 10 weeks.

• NOTE: January 2013: CeriFi has confirmed with CTEC that a CRTP may earn his/her missing CPE up until the January 15 deadline. In order to renew online at the CTEC web site, all CPE must have been posted by CE providers, otherwise, the CTRP will not be allowed to renew. If you use this new late renewal option, you should add an appropriate extension to your CTEC status report so as to not double count any CPE that you may have earned between November 1 and January 15, since your new CPE period will have already begun on the prior November 1. Refer to the CTEC web site for more information.

→ Get monthly reminders before this deadline

What happens if the requirement is not met.

Refer to "Reporting Date" above.

Reduced or prorated requirements for a first renewal.

Once you are registered, you must complete 20 hours of continuing education by the upcoming October 31st.

Certificates of QE Completion valid through the following October 31st. For those new preparers who submit an application during August, September or October and are issued a Certificate of Completion, their certificates are valid only through October 31st of the same calendar year in which they registered. In order to renew their registration for the following year, these individuals, within a two to three month period, are required to complete a minimum of 20 hours of continuing education, through an approved provider, before October 31st.

Preparatory Courses:

The IRS allows providers that offer preparatory courses for the registered tax return preparers’ test to prospective registered tax return preparers to award Federal tax subject credit for those courses. The number of credit hours for these preparatory courses is determined by the course contact hours. However the maximum credit for these courses is limited to 10 hours’ credit. CTEC credit can also be awarded, provided the provider of such a course is also a CTEC-approved provider.

CTEC requires students to successfully complete a CTEC-approved 60-hour qualifying education (QE) course before they can apply for CTEC registration. It would seem that the CTEC QE course is of the same nature as a RTRP test preparatory course and will qualify for 10 hours of Federal tax subject credit if the provider obtains course approval from the IRS.

New Preparer Registration After August 15th

Because most preparers do not prepare taxes during August, September and October of any given year, applications of all new preparers applying between August 15th and October 31st will be deferred. Letters will be sent to those applicants explaining CTEC's registration process and indicating that New Preparer applications will not be processed until November 1st, at which time a Certificate of Completion will be issued which will be valid through October 31st of the next calendar year. However, if the applicant is planning on preparing taxes during August, September and October of that calendar year, CTEC will ask that they mark the appropriate box on the letter and resubmit application with the letter to the CTEC office. Once received by staff, their application will be processed immediately and a Certificate of Completion issued. This certificate will be valid only through October 31st of that calendar year, and the applicant will be required to take 20-hours of continuing education in order to renew for the next calendar year.

Who may be excused from all or part of this requirement.

Who Is Exempt From Registration: The California Business and Professions Code Section 22258 provides for certain exceptions to the registration requirements for tax preparers within the state. These exceptions include:

• A person (sole proprietor) with a current valid license issued by the [California] State Board of Accountancy (and his or her employees while functioning within the scope of their employment).
• A person (sole proprietor) who is an active member of the State Bar of California (and his or her employees while functioning within the scope of their employment).
• Some employees of a trust company or business as defined in the statute, or a financial institution and employees thereof who are regulated as defined in the statute.
• A person (sole proprietor) who is enrolled to practice before the Internal Revenue Service [Enrolled Agent / Enrolled Retirement Planning Agent] pursuant to Subpart A (commencing with Section 10.1) of Part 10 of title 31 of the code of Federal Regulations, and his or her employees while functioning within the scope of their employment.
• An employee of any trust company or trust business as defined in Chapter 1 (commencing with Section 99) of Division 1 of the Financial Code while functioning within the scope of his or her employment.
• A financial institution regulated by the state or federal government, and employees thereof, insofar as the activities of the employees are related to their employment and the activities of the financial institution with respect to tax preparation are subject to federal or state examination or oversight.

Who Is Not Exempt From Registration:

• A person (sole proprietor) with a current valid license issued by the State Board of Accountancy (and his or her employees while functioning within the scope of their employment) who becomes a partnership, incorporate, and/or opens multiple offices.
• A person (sole proprietor) who is an active member of the State Bar of California (and his or her employees while functioning within the scope of their employment) who becomes a partnership, incorporate, and/or opens multiple offices.
• A person (sole proprietor) who is enrolled to practice before the Internal Revenue Service pursuant to Subpart A (commencing with Section 10.1) of Part 10 of title 31 of the code of Federal Regulations, (and his or her employees while functioning within the scope of their employment) who becomes a partnership, incorporate, and/or opens multiple offices.

Exemption Issues: Any individual or entity operating a tax preparation business under one of the exemptions above should be aware of potential problems that could be encountered should that individual or entity no longer qualify for exemption.

1. Sale of Business - If the business is sold to an individual or entity not covered under one of the five (5) exceptions listed above, any employees of that business would no longer be exempt and would no longer be allowed to prepare returns.
2. Death of an Individual Qualifying Under the Exemption Provisions - Upon the death of an individual qualifying under one of the five (5) exceptions listed above, any employee of that individual’s business would no longer be exempt and would no longer be allowed to prepare returns.
3. Loss of Exemption Status - Should the individual qualifying under one of the five (5) exceptions listed above lose the status by which the exemption was established, both the individual and any employees of that individual’s business would no longer be exempt and would no longer be allowed to prepare returns.

Whether unused credits can apply to the next period.

Not permitted.

→ CE Tracking calculates carryover for you

Rule changes the regulator has finalized, with effective dates.

Refer to the specific sections above for more details on any of the items noted below.

Requirements for CE Providers:

May 2015: During the May 2015 CTEC Providers Task Force Meeting, several CTEC policies were updated, deleted, or are new. Below is a listing of those policies affected.

• CE01 - Continuing Education Policies (Policy DELETED)
• CE02 - Previously Approved CE Topics (Policy DELETED)
• CE03 - Schools Approved for Continuing Education (Policy DELETED)
• CP02 - Provider Application (Policy UPDATED)
• CP03 - Denied Curriculum Provider Appeal Procedure (Policy UPDATED)
• CP06 - Provider Reporting (Policy UPDATED)
• CP07 - CE Credit - Program Developers and Instructors (Policy UPDATED)
• CP14 - Course Review Policy (Policy UPDATED)
• CP17 - Allocation of CE Hours (Policy UPDATED)
• CP18 - Curriculum Provider Noncompliance (Policy UPDATED)
• CP21 - Continuing Education Course Disclosures (Policy UPDATED)
• CP23 - Education Standards (Policy UPDATED)
• CP25 - Provider Task Force Meeting (Policy UPDATED)
• CP28 - Audit Policy (Policy UPDATED)
• CP34 - Advertising Disclosures (Policy UPDATED)
• CP35 - Provider Conduct (Policy - NEW)
• TP03 - Continuing Education Credit Hours (Policy DELETED)

Refer to sections above in the "Requirements for CE Providers" for the updated policies. Official versions of the policies above are available on the CTEC website (http://www.ctec.org/Provider/ProviderPolicies/).

Requirements for CE Providers:

May 2014 (then revised at the November 2014 Annual Board Board Meeting): The Curriculum Provider Standards Committee of the California Tax Education Council has responsibility for several of CTEC's statutory duties including: setting standards and procedures for curriculum providers, approving or denying schools as curriculum providers, enforcing compliance on the part of curriculum providers, and providing CTEC Registered Tax Preparers and the public with a list of approved curriculum providers.

At the May 2014 Provider Task Force meeting, CTEC introduced newly revised educational policy standards. These standards affected the following:

• CP02 - Provider Approval Process
• CP03 - Denied Curriculum Provider Appeal Procedure
• CP04 - Provider Complaint Procedure
• CP05 - Provider Assistance
• CP06 - Provider Reporting
• CP13 - Self-Study Courses
• CP14 - Periodic Course Review Policy
• CP15 - Provider Curriculum Review Expense
• CP18 - Curriculum Provider Non-Compliance
• CP23 - Education Standards
• CP24 - Limitations on the Use of Federal & State Publications
• CP28 - Self-Study Course Auditing Policy
• CP32 - Update Course Guidelines (including Mandatory Subject Matter)

Additional details on these policies can be referred to in the "Requirements for CE Providers" sub-sections above. Official versions of the policies above are available on the CTEC website (http://www.ctec.org/Provider/ProviderPolicies/).

Summary Reports for Individual Activities:

Starting January 1, 2014: All CTEC approved providers are required to submit education electronically to CTEC within 10 business days of the date the student completes the course. Providers who are not in compliance with the revised new due date will be fined according to the following schedule:

• 1st offense $100
• 2nd offense $200
• 3rd offense $300
• 4th offense $400
• 5th offense $500

Standards of Approval of CE Activities:

November 2012: CTEC Board has revised and updated its Education Standards (CP23-05) and Limitations on the use of Federal and State Publications (CP24-01) (as noted in "Standards of Approval of CE Activities" above).

Word Count Formula: Effective November 16, 2012: The word count formula is now accepted based on CTEC policy (CP13-02).

Self-Study Course Auditing Policy: Effective November 16, 2011: With regard to self-study courses, the CTEC Board of Directors feels reviewing a single course for a provider is insufficient to maintain the required course quality and proper CE hour allocation. Rather than requiring all providers to submit additional courses and be subjected to additional course review fees, the Board is instituting a self-study course audit program that will be initiated January 1, 2013. Programs audited under this new program will be required to meet the same curriculum standards as a program submitted by a provider for provider status approval. Refer to CTEC Policy CP28-01 for more information.

Reporting Date:

Effective November 1, 2012: All CRTPs have until January 15th of each year to renew late. (e.g., CRTPs who failed to meet the October 31, 2012 renewal deadline only have until January 15, 2013 to renew.) CRTPs who do not renew by January 15 will have to start over, re-take the qualifying education course and register as a new CRTP. Information from the past CTEC registration (i.e., completed education, registration history and prior CTEC number) will not be transferred to the new registration.

Prior to this policy change, CRTPs had a one-year grace period to renew late. The focus of the new deadline is to improve compliance. CRTPs cannot prepare any tax returns for a fee until they have a current CTEC registration, which is why the CTEC Council decided to shorten the late renewal grace period from 12 months to 10 weeks.

• NOTE: January 2013: CeriFi has confirmed with CTEC that a CRTP may earn his/her missing CPE up until the January 15 deadline. In order to renew online at the CTEC web site, all CPE must have been posted by CE providers, otherwise, the CTRP will not be allowed to renew. If you use this new late renewal option, you should add an appropriate extension to your CTEC status report so as to not double count any CPE that you may have earned between November 1 and January 15, since your new CPE period will have already begun on the prior November 1. Refer to the CTEC web site for more information.

January 27, 2012: CTEC to Adopt IRS Return Preparer Standards

CTEC is revising a substantial portion of the CTEC policy and procedure manual to bring it into conformity with the new IRS standards. The purpose of the changes is to communicate to CRTP and CTEC education providers that CTEC adopts the new IRS standards such that in meeting IRS continuing educational standards, a CRTP will meet both Federal and state continuing educational requirements. Therefore, for courses completed after December 31, 2011, with the exception of California tax topic courses, only IRS-approved courses offered by IRS-approved providers will be approved for CTEC credit. Refer to paragraphs with the effective date of January 27, 2012 for details on these changes.

Breakdown of Specific Requirements:

Effective January 1, 2012: CTEC has revised the breakdown for the 20-hour annual CE requirement. It is now broken down as follows:

• Fifteen (15) federal tax law credits, including:
• Ten (10) "general" federal tax law credits;
• Three (3) federal tax law "update" credits; and
• Two (2) "ethics" credits.
• Five (5) state (California tax law credits)

• NOTE: November 28, 2011: CeriFi has confirmed with CTEC that:
• This requirement is in place for the annual period of 11/1/2011 – 10/31/2012.
• None of the definitions for continuing education changed as part of the new requirements.
• In cases where a CRTP earns more than 3 credits in federal tax law "update" courses, the excess credits may counted toward the 10 federal tax law "general" credit requirement
• All CTEC education must be provided by a CTEC approved sponsor with CTEC approved courses/numbers.