small business accounting
Understanding YOUR Tax Return Preparer
Credentials & Qualifications
Anyone with an IRS Preparer Tax Identification Number (PTIN) and an Electronic Filing Identification Number (EFIN) is authorized to prepare federal tax returns.
However, tax professionals have differing levels of skills, education and expertise.
There are four general types of tax preparers: Certified Public Accountants (CPAs), Enrolled Agents (EAs), Tax Attorneys, and non-credentialed preparers.
An important difference among the types of practitioners is “representation rights.”
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.
Certified Public Accountants (CPAs) – The CPA designation distinguishes licensed accounting professionals committed to protecting the public interest. CPAs may offer a range of services ranging from specialization in tax preparation and planning to offering organizations around the world tax, financial reporting and advisory services to drive strategic decision-making and foster growth and success. All licensed CPAs:
are licensed by state boards of accountancy, the District of Columbia, and U.S. territories,
have passed the Uniform CPA Examination,
have completed a study in accounting and at least 150 hours of extensive education at a college or university,
have passed a rigorous four-part exam
have met the experience requirements,
maintain good character requirements established by their respective boards of accountancy,
must comply with ethical requirements, and
must complete specified levels of continuing education in order to maintain an active CPA license.
The Wisconsin Department of Safety and Professional Services has provided the public with a search tool to verify a credential/license holder's eligibility to practice in Wisconsin.
Attorneys are 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.
Enrolled Agents are 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. Learn more about the Enrolled Agent Program.
Choose your return preparer wisely and always inquire about their licensing, education and training
LIMITED REPRESENTATION RIGHTS
Some preparers without one of the above credentials 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. Tax return preparers with limited representation rights include:
Annual Filing Season Program Participants are members of a voluntary program that recognizes the efforts of return preparers who are generally not attorneys, certified public accountants, or enrolled agents. It was designed to encourage education and filing season readiness. The IRS issues an Annual Filing Season Program Record of Completion to return preparers who obtain a certain number of continuing education hours in preparation for a specific tax year.
Beginning with returns filed after Dec. 31, 2015, only Annual Filing Season Program participants have limited practice rights meaning they can 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.
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. Essentially, this group of tax preparers have paid the IRS to receive a PTIN (personal taxpayer identification number) and are not regulated by any agency or board.
Beginning January 1, 2016, PTIN Holders are only authorized to prepare tax returns; they have no authority to represent clients before the IRS for any reason (except regarding returns they prepared and filed December 31, 2015, and prior).
REMINDER: Everyone described above must have an IRS issued preparer tax identification number (PTIN) in order to legally prepare your tax return for compensation. Make certain your preparer has one and enters it on your return filed with the IRS.
(They are not required to enter it on the copy they provide you.)
To help taxpayers determine return preparer credentials and qualifications, the IRS has provided a public directory containing certain tax professionals. The directory is a searchable and sortable database, and includes the name, city, state, and zip code of the tax preparer.
Only credentialed preparers are listed in this directory; PTIN Holders are not included.