Clarification of Signing Non-1040 Preparers

In a recent phone call, David Williams has clarified a common misclassification of the exemption for signing non-1040 tax preparers. The preparers in question are those who prepare/sign Form 940, 941 or other payroll tax forms or other non-1040 tax returns. These preparers, as well as non-signing supervised Form 1040 preparers, are exempt from taking the competency exam. However, such preparers cannot be exempt in both categories.

If you have employees who do bookkeeping and prepare client payroll tax returns during the off-season and also prepare Form 1040 returns during tax season, they are subject to the competency test and the other RTRP requirements. They can still sign non-1040 tax returns, but they can no longer be exempt from the RTRP requirements as either a non-signing supervised 1040 preparer or a signing non-1040 income tax return preparer. In order for them to stay exempt, they must either prepare/sign only non-1040 tax returns or prepare 1040 returns under appropriate supervision. (NATP)