Understanding Tax Return Preparer Credentials and Qualifications
Any tax professional with an IRS Preparer Tax Identification Number (PTIN) is authorized to prepare federal tax returns. However, tax professionals have differing levels of skills, education and expertise.
An important difference in the types of practitioners is “representation rights”. Here is guidance on each credential and qualification:
UNLIMITED REPRESENTATION RIGHTS: Enrolled agents, certified public accountants, and attorneys have unlimited representation rights before the IRS. Tax professionals with these credentials may represent their clients on any matters including audits, payment/collection issues, and appeals.
Enrolled Agents – Licensed by the IRS. Enrolled agents are subject to a suitability check and must pass a three-part Special Enrollment Examination, which is a comprehensive exam that requires them to demonstrate proficiency in federal tax planning, individual and business tax return preparation, and representation. They must complete 72 hours of continuing education every 3 years.
Certified Public Accountants – Licensed by state boards of accountancy, the District of Columbia, and U.S. territories. Certified public accountants have passed the Uniform CPA Examination. They have completed a study in accounting at a college or university and also met experience and good character requirements established by their respective boards of accountancy. In addition, CPAs must comply with ethical requirements and complete specified levels of continuing education in order to maintain an active CPA license. CPAs may offer a range of services; some CPAs specialize in tax preparation and planning.
Attorneys – Licensed by state courts, the District of Columbia or their designees, such as the state bar. Generally, they have earned a degree in law and passed a bar exam. Attorneys generally have on-going continuing education and professional character standards. Attorneys may offer a range of services; some attorneys specialize in tax preparation and planning.
LIMITED REPRESENTATION RIGHTS: Preparers without one of the above credentials (also known as “unenrolled preparers”) have limited practice rights. They may only represent clients whose returns they prepared and signed, but only before revenue agents, customer service representatives, and similar IRS employees, including the Taxpayer Advocate Service. They cannot represent clients whose returns they did not prepare and they cannot represent clients regarding appeals or collection issues even if they did prepare the return in question.
Annual Filing Season Program Participants – The Annual Filing Season Program is a voluntary program designed to encourage tax return preparers to participate in continuing education (CE) courses. Beginning with the 2015 filing season unenrolled return preparers can elect to voluntarily take continuing education each year in preparation for filing season and receive an Annual Filing Season Program – Record of Completion. The program is important for a number of reasons. It encourages unregulated return preparers who don’t have to meet continuing professional education requirements to stay up to date on tax laws and changes. It helps lessen the risk to taxpayers from preparers who have no education in federal tax law or filing requirements. And it allows preparers without professional credentials to stand out from the competition by giving them a recognizable record of completion that they can show to their clients.
Beginning in 2016, only AFSP participants who obtain a Record of Completion will have limited representation rights before the IRS for clients whose returns they prepared and signed. PTIN holders without an AFSP - Record of Completion or without other professional credentials will not be able to represent clients before the IRS in any matters.
PTIN Holders –Tax return preparers who have an active preparer tax identification number, but no professional credentials and do not participate in the annual filing season program, are authorized to prepare tax returns. Effective on January 1, 2016, they have NO represtation rights before ANY division of the IRS.
DIRECTORY OF FEDERAL TAX RETURN PREPARERS WITH CREDENTIALS AND SELECT QUALIFICATIONS: To help taxpayers determine return preparer credentials and qualifications, the IRS has a public directory on the IRS website. The searchable, sortable database contains the name, city, state, and zip code of attorneys, CPAs, enrolled agents, enrolled retirement plan agents, and enrolled actuaries with valid PTINs, as well as AFSP Record of Completion recipients.