While the hundreds of tax-law changes have been duly noted at this stage, little attention has been given to new rules governing paid tax-return preparers by the Internal Revenue Service.

Early in 2010, the Internal Revenue Service made findings and recommendations in Publication 4832, "Return Preparer Review," concerning the results of an in-depth review of the tax-return preparer industry. The IRS recommended increased oversight of tax-return preparers through new regulations for the protection of taxpayers who pay to have their taxes prepared.

Any taxpayer who hires a tax preparer needs to be aware of the new regulations. All paid preparers were required to register with the IRS and renew or obtain a preparer tax identification number by the end of 2010. Preparers will no longer be allowed to use their Social Security numbers on the tax returns prepared for their clients.

The IRS published the final regulations last fall addressing the requirements for the registration of tax-return preparers, competency testing requirements, continuing-education requirements, and the extension of ethics rules.

Prior to Jan. 1, anyone could prepare a tax return and charge a fee for that return. The preparer wasn't required to meet any competency or ethics standards unless he or she was an attorney, a certified public accountant, or an enrolled agent.

The first provision of the new regulations requires all paid tax-return preparers, including attorneys, CPAs, and enrolled agents, to have a Preparer Tax Identification Number (PTIN) or to renew their current number. Attorneys and CPAs are licensed by individual states and may or may not specialize in tax. Individuals who aren't licensed by the state can't refer to themselves as CPAs. Enrolled agents, or EAs—that's the designation I hold—are licensed by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the IRS on issues including collection, audits, and appeals and have completed testing from the IRS on individual and business tax forms. Because such agents are federally licensed, they aren't restricted to practicing in one state.

Enrolled agents, attorneys, and CPAs already adhere to a code of ethics and professional conduct. They have always been required to complete annual continuing professional education to maintain their professional licenses. The new regulations also will require registered tax-return preparers who aren't attorneys, CPAs, or enrolled agents to complete a minimum number of continuing education hours in federal taxation, including two hours of ethics.

The second provision of the new regulations requires registered tax return preparers who aren't an attorney, CPA, or enrolled agent to pass a minimum competency test.

The first test will be available mid-2011 and will cover only individual tax forms, but a later test is planned to cover business tax forms. The IRS issued provisional preparer tax ID numbers between last September and December to individuals who passed a tax-compliance background check, and those individuals have three years to pass the minimum competency test for individual tax returns.

They may continue to prepare and sign tax returns for their clients. They may not, however, say they are registered tax-return preparers until they have passed the competency test.

The new regulations also apply to bookkeepers who aren't employees of the company to which they are providing services. If a bookkeeper prepares federal forms 940, 941, or others listed in the regulations and charges the company a fee for these services, the bookkeeper was required to obtain a preparer tax-ID number from the IRS before the end of last year. The bookkeeper is required to sign the form as a paid preparer in the appropriate box and fill in his or her PTIN number on the appropriate line.

Also new this year is an e-file requirement for tax-return preparers. Any tax professional who prepares more than 100 individuals returns is required to file them electronically. Starting Jan. 1, 2012, the number drops to 10 returns.

In essence, this is another attempt by the IRS to protect taxpayers who pay for tax-preparation services. When a tax return is e-filed, it helps the IRS gather and check information more quickly and efficiently.

This year brings many challenges for both the taxpayer and the tax preparers. Many of the new regulations will be good; many make it more confusing when choosing a tax professional. Having a preparer tax-ID number doesn't prove competency in tax preparation. Most tax preparers regardless of a professional license provide excellent service to their clients, and a PTIN won't change that.

Taxpayers should be careful, however, because a few unscrupulous return preparers file fraudulent tax returns and defraud their clients. In 2010, the IRS initiated 397 investigations. From that, 145 tax preparers were convicted, and 132 were sentenced to time in prison.

There are many preparer penalties ranging from $250 to $10,000 regarding activities representing the preparation of a tax return. Penalties can be assessed when a preparer willfully overstates deductions or understates income. The tax preparer must exercise due diligence in determining the correctness of statements made by the taxpayer when preparing the return.

For the second year, the IRS is contacting selected tax-return preparers for onsite visits in an effort to improve the accuracy and quality of filed federal tax returns and to heighten the awareness of preparer responsibilities.

These IRS contacts are another step in the IRS's increased efforts to ensure paid tax-return preparers are assisting taxpayers appropriately.

In the end the taxpayer is responsible for the numbers and information on the tax return.

Chose a tax preparer wisely, and make sure they sign your return and fill in their PTIN on the appropriate line.