New Requirements for Tax Preparers

How to Become a Certified Tax Preparer

New Requirements for Tax Preparers

Each year, tax preparers help tens of millions of Americans prepare and file their taxes. They use their experience and expertise to ensure that clients pay the correct amount to the government.

To regulate the tax preparation profession, the IRS and many state governments grant qualified professionals certifications and licenses.

While you do not need a certification to prepare taxes in many states, earning one can bring valuable benefits, including a higher salary and job security.

Explore programs of your interests with the high-quality standards and flexibility you need to take your career to the next level.

Accountants who earn a tax preparation certification do so for many reasons. Certification yields more job opportunities and allows tax professionals to represent clients in front of the IRS.

The following sections cover how to become a tax preparer, exams and credentials, and professional organizations that can assist you in your new career.

As you read, please keep in mind that the requirements to become a tax preparer in your home state may vary slightly from what this article describes.

Why Become a Tax Preparer?

Tax preparers enjoy many benefits throughout their careers, increased job security, salary, and flexibility. The benefits below represent just some you can expect from entering the tax preparation field.

As you review the information in this section, keep in mind that certified tax preparers (e.g.

, authorized agents, CPAs, and tax attorneys) enjoy even greater benefits, making the certification process a wise investment that can grow your career and allow you to make a more positive impact on your clients.

  • Job Security: As a tax preparer, you should always have clients. Nearly half of all Americans file tax returns each year, and many of them turn to these professionals for guidance. Changes in tax laws and regulations mean that even tax filers who once filed their taxes may need your services.
  • Salary: Tax preparer careers often boast high salaries, especially for CPAs and authorized agents who complete rigorous training courses and exams. Even noncertified preparers can benefit from high hourly salaries if they possess specialized training and experience. Employment in large metropolitan areas often makes for some of the highest tax preparer salaries.
  • Flexibility: As the IRS requires that Americans pay their federal income taxes by April 15, most Americans need tax preparation services only in the spring months. For the remainder of the year, tax preparers can pursue other professional and personal opportunities while still offering their services to people in need.
  • Larger Client Base: An accountant who becomes a tax preparer can offer their services to a larger client base to increase their job security and salary. More clients can also result in positive word-of-mouth, allowing accountants to build their personal brands faster than if they had not become tax preparers.
  • Lifelong Learning: Accountants in all specialties can complete professional development courses to learn the latest best practices and laws in the field. Certified tax preparers must complete these courses to keep their certifications active. With an emphasis on lifelong learning, tax preparation professionals always possess an in-demand skill set that employers and clients need.

Understanding Tax Return Preparer Responsibilities and Qualifications

Throughout their careers, tax preparers can enhance their qualifications and expand their services by earning professional certifications. This section contains vital information on what differentiates noncertified and certified professionals in this field.

Types of Tax Return Preparers and Their Responsibilities

Tax preparers fill out and submit their clients’ tax returns. This process involves reviewing financial documents, interfacing with clients, and in some cases, representing clients in front of the IRS.

To stay up to date with the rapidly evolving accounting field, tax preparers earn certifications and further their education through professional development and continuing education courses.

Certification and professional development can often lead to managerial job opportunities, a higher salary, and greater responsibilities.

Tax preparers fall into two categories: certified and noncertified. Certified tax preparers have unlimited representation rights. Continue reading to learn more about this important designation and what it means for professionals.

  • As the name implies, professionals with unlimited representation rights can represent their clients in front of the IRS on any issue (e.g., audits, appeals, etc.).
  • Each enrolled agent must pass a rigorous examination and complete 72 hours of professional development every three years. Other requirements include criminal and financial background checks. Review this guide to learn more about how to become an enrolled agent and how this in-demand credential can advance your career.
  • CPAs must first earn a bachelor’s or a master’s degree with an emphasis in accounting. They then qualify to take the Uniform CPA Examination. Once professionals pass this exam, they can earn CPA licensure. Learn more here about how to become a CPA.
  • Tax attorneys must pass the bar exam in their home states and often become CPAs. Other tax attorneys can gain their tax expertise by interning at law firms that specialize in taxation. As lawyers, they can represent their clients in court and in front of the IRS, even if they did not prepare those clients’ taxes.
  • Tax preparers who are not enrolled agents, CPAs, or tax attorneys possess limited representation rights. They can file clients’ taxes and represent their clients in specific circumstances. However, these rights extend only to clients whom tax preparers have already worked with directly. Most professionals who work for tax preparation companies have limited representation rights.
  • The IRS created the AFSP to raise knowledge and professionalism among tax filers with limited representation rights. Tax preparers can first earn 18 continuing education credits from IRS-approved providers and must pass an exam. To maintain an AFSP credential, professionals are required to earn an additional 15 continuing education credits each year.
  • Possessing a PTIN is the minimum federal requirement to file taxes on someone else’s behalf. PTIN holders who do not possess an AFSP cannot represent their clients in any way. However, as all tax preparer positions require a PTIN, it is wise to request one from the IRS as soon as possible so that you can start working towards other tax preparation credentials.

Common Credentials for Tax Preparers

Tax preparers often need specific credentials to practice, especially if they want to work independently. To earn credentials, professionals can complete training courses, register with the IRS, and follow their states’ laws and regulations. In addition to the credentials outlined in this section, many tax preparers also become CPAs or enrolled agents.

Preparer Tax Identification Number

Tax preparers of all backgrounds need a PTIN to file tax returns on behalf of their clients. PTINs identify these professionals to the IRS and protect them from fraud, as they do not need to submit their Social Security number.

Tax professionals can obtain a PTIN through the IRS website. The online application process typically takes less than 15 minutes. Applicants can also submit a paper application by filing IRS Form W-12.

Tax preparers should receive their PTINs in 4-6 weeks after applying.

Tax Training Courses

Tax training courses can help you launch your career and stay up to date with the latest changes in tax laws and regulations. These courses appeal to professionals with some accounting experience who want to bolster their tax preparation knowledge and skills.

Completing a course may also qualify you for a promotion, raise, or other benefits in your current position. Finally, a tax training course may confer professional development hours, which most tax preparers need to maintain professional licenses and certifications.

  • Jackson Hewitt: The entry-level tax course at Jackson Hewitt introduces aspiring tax preparers to essential tax preparation topics, such as credit and adjustments to income. The course lasts approximately 70 hours, and some students may qualify for college credit.
  • H&R Block: H&R Block’s tax preparation course teaches people how to file their taxes and helps professionals enter the tax preparation field. The in-depth course covers adjustments, credits, and ethics, among other topics.

Electronic Filing Identification Number

Organizations that file taxes on behalf of others need an EFIN from the IRS. An organization can become an authorized e-file provider by applying through the IRS website.

During the application process, an organization submits information concerning the tax preparers who are authorized to use the EFIN. These professionals must submit all credentials and their fingerprints to the IRS.

After receiving the completed application, the IRS performs credit and criminal background checks on all persons listed on the application.

State Licensing Requirements

Currently, tax preparers in 20 states must follow specific state regulations to practice. Requirements vary among states but typically include disclosures or registering with a state agency.

Tax preparers can meet these requirements in addition to those set by the IRS. Finally, five states require noncredentialed tax preparers to earn a state-issued license or registration to practice.

If you live in one of the states below, click on the embedded link to learn about the necessary steps to become a tax preparer.

  • California
  • Connecticut
  • Maryland
  • Nevada
  • New York

As you prepare for your career as a tax preparer, consider joining organizations that represent tax preparers, CPAs, and other accounting professionals.

While membership may require a fee, you can receive access to networking events, professional development courses, mentors, and private job boards, among other valuable benefits.

The seven professional organizations below represent just a few that can help you fulfill your dream of working as a certified or noncertified tax preparer.

Not Ready for Certification Yet? Explore Degree Options in Accounting

Источник: https://www.accounting.com/certifications/certified-tax-preparer/

Preparer Regulations By State

New Requirements for Tax Preparers

State Registration: Yes.

  • Annual Registration – $33
  • Must complete online application for New Preparers at CTEC website
  • Must pass a background check and fingerprinting procedure (Live Scan)
  • Must possess and maintain IRS PTIN and a $5,000 tax preparer bond
  • Must register with CTEC within 18 months of completion date on Qualifying Education certificate of completion
  • Renew registration with CTEC by October 31st each year

State Exam: None

Qualifying Education (QE): Yes

Continuing Education (CE): Yes

  • Annual – 20 hours of CE from CTEC Approved Provider: Including 10 hours federal tax law, 3 hours federal tax law update, 2 hours Ethics, and 5 hours state tax law
  • Register for CTEC Approved CE

Connecticut

State Registration: Yes

  • $100 registration application fee + $50 renewal fees every two years
  • Must be 18+ years of age and possess high school diploma
  • As of January 1, 2022, a certificate of completion of the annual filing season program administered by the IRS will be required in order to receive a permit.
  • More info

State Exam: No

Qualifying Education: No

  • Must present evidence that you have experience, education, or training in tax preparation services.

Continuing Education: No

Iowa

State Registration: No

  • Tax return preparers must have an IRS PTIN and include it on all Iowa tax returns they prepare, regardless of the year of the return. Violators of this provision will incur a $50 civil penalty for each violation (not to exceed $25,000 in any calendar year).

State Exam: No

Qualifying Education: No

Continuing Education: Yes

  • Annual – 15 hours, at least 2 hours must pertain to professional ethics, the remainder must relate to income tax
  • CE must be taken by an IRS approved provider, and pertain to ethics or income tax
  • Register for Federal CE
  • More info

Maryland

State Registration: Yes

  • $100 Bi-annual registration from date of issuance
  • Must possess and maintain IRS PTIN and must submit copy of IRS PTIN Confirmation Certificate to the Board prior to beginning of each tax year
  • More info

State Exam: Yes

  • $65 fee
  • No test required if you are: an actively licensed CPA, IRS Enrolled Agent, attorney in good standing, or employee of state, local and federal government who performs tax return services in accordance with their official duties
  • Pass score = 70%+

Qualifying Education: No

Continuing Education: Yes

  • Bi-annual – 16 hours
  • Four of the 16 hours must be in Maryland State tax-related subjects
  • Two of the four Maryland hours may be satisfied by a federal or state course in ethics
  • Register for Federal CE
  • More info

New York

State Registration: Yes

  • Annual – For every calendar year in which you will be paid to prepare one or more NY State tax return(s) or report(s); Or… will facilitate a refund anticipation loan (RAL) or refund anticipation check (RAC)
  • Must be 18 years of age, and possess high school diploma or equivalent
  • More info

State Exam: No

  • No test currently. However, when a competency exam becomes available, you have three years to complete/pass it

Qualifying Education: If you have less than three years of experience preparing New York State tax returns, complete a 16-hour basic tax course

Continuing Education: Yes

  • Annual – hours vary, but a minimum of 4 hours
  • Note: if you complete the IRS AFSP for tax preparers, you cannot credit it toward your required NY State CE hours
  • Register for Federal CE
  • More info

Oregon

State Registration: Yes

  • Initial License: $60/Preparer, $65/Active LTP Consultant, $95 all others
  • Renewal License: Active Status: $80/Preparer, $95/Consultant
  • Combination License – Initial License + New Business Registration: $110/Preparer, $125/Active LTP Consultant
  • Other fees apply if inactive or need to reactivate license
  • Must be at least 18 years old, possess high school or equivalent, and possess and maintain an IRS PTIN
  • Must receive and submit your “Session Attendance Certification Form” (Certificate of Completion) to the Oregon Board office with your license application
  • More info

State Exam: Yes

  • Exam fee: $60 for Preparers and Consultants, plus
  • Proctor fees: $50/Preparer, $85/Consultant
  • Pass score = 75%+

Qualifying Education: Yes

  • 80-hour basic tax course from OBTP Approved Provider
  • Certificate of completion of course must be submitted with license application before license will be issued

Continuing Education: Yes

  • Annual – 30 hours
  • CE must be related to tax law and tax preparation
  • At least two hours must be related to ethics or professional conduct
  • CE must be completed during 13 months prior to each license year
  • Same class may not be counted toward two different renewals
  • Renewal fees: $80/Preparer, $95/Consultant
  • Register for Federal CE
  • More info

Источник: https://www.theincometaxschool.com/preparer-regulations-by-state/

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