Did you know there are no educational or licensure requirements for paid tax preparers?
It’s true. Per IRS regulations, the only requirement is that a person have a PTIN, or a Preparer Tax Identification Number. Anyone can get one, and it’s not expensive. Once you have a PTIN, you’re allowed to be a paid tax return preparer. No classes, no licenses (short of any business licenses) – nothing.
(A few states do have a registration and education requirement in order to prepare tax returns for money, but as of the date of this writing, the vast majority of states, including Minnesota, do not.)
How should you, as an informed consumer, find an appropriate tax preparer? Let me walk you through some of the options that are available for a paid tax preparer to help show you that they know what they’re talking about.
First is the CPA, or Certified Public Accountant. CPAs go through a rigorous education and licensure process to obtain their license, and need to complete continuing education requirements to maintain it. Their knowledge is across all of accounting – including tax. Most CPAs would be well-qualified to do your taxes. They are also in the highest demand, and have a lot of work demand other than taxes.
Next is the Enrolled Agent. To become an Enrolled Agent, a person must pass a 3-part exam, known as the “Special Enrollment Exam”. Once completed, the IRS completes a tax compliance check, and if everything is in order, they become an Enrolled Agent. Enrolled Agents are also required to take continuing education every year, to ensure they keep up with the latest in tax law. You can trust that an Enrolled Agent knows how to get your taxes prepared.
The IRS also has what they call an AFSP, or Annual Filing Season Program. Practitioners under the AFSP have to take an annual refresher course and continuing education to prove they are ready to file for the current year. Again, this is all focused on tax law and issues, so you can trust that an AFSP can get your taxes taken care of.
Uncredentialed Preparers can file your taxes as well, but they are not licensed by anyone, and don’t have any mandate to keep up on tax law with continuing education. If you’re going to use an Uncredentialed Preparer, you should talk to them and understand their background an experience. Uncredentialed Preparers are not automatically bad preparers, but without a certification and continuing education requirements, it requires more due diligence on your part to decide if the preparer is for you.
There is also what the tax community refers to as “Ghost Preparers”. These are the types of folks who will fill out your return for you and get it filed, but they don’t obtain a PTIN, and they don’t use professional software to do it. Often they will use consumer-grade software. Paid preparers should always be signing your return in the Paid Preparer section, and entering their PTIN so the IRS knows who prepared the return.
If you find yourself in an IRS audit, several types of preparers can help you. CPAs, Enrolled Agents, and Tax Attorneys all have unlimited practice rights with the IRS. This means they can represent you to any level of the IRS – including audits and appeals – even if they didn’t prepare your tax return. AFSP participants can talk to the IRS on your behalf in the audit phase, as long as they prepared the return in question. Licensed attorneys can also represent taxpayers in the US Tax Court and District Courts, although a very small number of situations actually need to go to Tax Court.
I obtained my Enrolled Agent credential as a way to prove to you that I know what I’m talking about when it comes to tax. My credential is not more important than anyone else’s, but it’s the one I chose to help prove my knowledge and hold myself accountable to keeping up with the knowledge.
I’d love to evaluate your tax situation and see if I would be a good fit to help solve your tax issues. Contact Us today to schedule a discovery call today. If you don’t trust me to prepare your taxes, I’d encourage you to seek out a CPA, EA, or AFSP participant to help you.
