AFSP – Am I exempt or non-exempt?
What does it mean to be “exempt”
The term “exempt” related to the IRS Annual Filing Season Program (AFSP) does not mean exempt from the the program itself. It just means you are exempt from one part of the program: the Annual Federal Tax Refresher (AFTR) course, which is a 6-hour course with a timed final exam.
The category of preparers called “credentialed preparers” are not expected to participate in the AFSP at all, and could be considered “exempt” from the entire program. Credentialed preparers ARE allowed to participate, if desired.
Who is exempt from the AFTR course?
The IRS recognizes it that some individuals have already studied for and passed state based tax preparer certification tests. Additionally some preparers have obtained credentials that indicate they have a solid basic knowledge of federal tax law.
The following tax preparers are not required to take the basic level course called the Annual Federal Tax Refresher (AFTR) to meet the voluntary CE standards.
The following are EXEMPT from the AFTR course
Registered Tax Return Preparers
Anyone who passed the Registered Tax Return Preparer (RTRP) test administered by the IRS from November 2011 to January 2013. The IRS has a record of this.
State registered return preparers
Return preparers who are active registrants of:
- Oregon Board of Tax Practitioners
- Licensed Tax Consultant (LTC)
- Licensed Tax Preparer (LTP)
- California Tax Education Council (CTEC) or
- Maryland State Board of Individual Tax Preparers (MITP)
NOTE: Tax preparers registered in New York are not classified as Exempt from the AFTR, and will need the 18 hours required for non-exempt preparers to obtain the AFSP Record of Completion. NY registered preparers are only required to pay a fee, and not subject to the CPE and/or testing requirements of OR, CA or MD.
Certain credentialed professionals
Individuals who have obtained credentials from the Accreditation Council for Accountancy and Taxation:
- Accredited Business Accountant/Advisor (ABA)
- Accredited Tax Preparer (ATP)
Passed Part 1 of the SEE for Enrolled Agents
Tax practitioners who have passed the Special Enrollment Exam Part 1 within the past three years. Note that when the Annual Filing Season Program first started, the exemption for passing the SEE was for two years, but the IRS later extended the exemption to three years.
Quality reviewers, instructors and return preparers with active PTINs. Just like other tax credentials, the AFTR exemption for VITA volunteers is only valid if you had the VITA credential during January 1st to December 31st of the prior year. So if you were a VITA volunteer several years ago, that won’t provide the exempt status for the current Annual Filing Season Program.
When is the Exempt determination made?
You must have an active valid license or certification as of December 31st of the prior year to be considered exempt for the current year.
The RTRP designation is an exception to this rule and anyone who passed the RTRP exam is classified as exempt for the duration of the Annual Filing Season Program.
What is the benefit of being classified as exempt?
If you are classified as exempt according to the classifications listed above, you are exempt from taking the Annual Federal Tax Refresher (AFTR) course. The AFTR course is a six hour course and in addition to completing the materials, you must pass a 100 question exam within a three hour time limit. You are allowed to take our exam a maximum of 4 times, however each exam contains a random mix of different questions.
In addition to saving three+ hours of your time, you are spared the expense of purchasing the extra CE hours. Exempt preparers take a 3 hour tax law update course instead of the timed 6 hour Annual Federal Tax Refresher course.
Do I need to notify the IRS that I am exempt?
No. Credentialed tax preparers such as EA, CPA, Attorney, RTRP, ABA, ATP and preparers registered in CA, OR or MD are not required to notify the IRS of their credential or provide evidence of it.
- IRS issued credentials (EA and RTRP) are immediately verified by the IRS
- Non-IRS issued credentials for exempt tax preparers are independently verified directly by the IRS, and may result in a longer delay in completing the AFSP process.
Which courses should I take?
After you determine if you are exempt or non-exempt, you can choose your CPE courses for your AFSP. (Note: feel free to call or email us if you are not sure about your status of being exempt or non-exempt). Remember, you must complete all courses by December 31st.
If you want to pick and choose your own courses, review the hours needed here:
and then go to our complete course listing to pick and choose the subjects you are specifically interested in–most students select courses from the tabs
You can also take courses from the Tax-books tab, but those courses do require you to obtain the book separately.
Who are credentialed preparers?
A credentialed preparer is a:
- Certified Public Accountant,
- Enrolled Agent,
- Enrolled Retirement Plan Agent,
- Enrolled Actuary or
Can credentialed preparers also be in the AFSP?
The AFSP program is not intended for credentialed preparers who already possess a much higher level of qualification. These preparers are still allowed to participate in the program, and they are required to meet the same CE requirements as preparers in the exempt category.
Although there is no cost associated with obtaining a record of completion for the AFSP, and many credentialed preparers would already have the necessary CE to meet the standards, there is very little benefit to obtaining the record of completion. The IRS database of tax preparers with qualifications already includes practitioners with recognized credentials and higher levels of qualification and practice rights, if they are registered with the IRS by having a PTIN.