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Understanding Tax Return Preparer Credentials

For 2014, any tax professional with an IRS Preparer Tax Identification Number is authorized to prepare federal tax returns. Tax professionals, however, have differing levels of skills, education and expertise. There are several different types of return preparers with credentials.

An important difference in the types of practitioners is “representation rights”. Here is guidance on each credential:

UNLIMITED REPRESENTATION RIGHTS: Enrolled agents, certified public accountants, and attorneys have unlimited representation rights before the IRS and may represent their clients on any matters including audits, payment/collection issues, and appeals.

Enrolled Agents – People with this credential are licensed by the IRS and specifically trained in federal tax planning, preparation and representation. Enrolled agents hold the most expansive license IRS grants and must pass a suitability check, as well as a three-part Special Enrollment Examination, a comprehensive exam that covers individual tax, business tax and representation issues. They complete 72 hours of continuing education every 3 years. For more information on enrolled agents, see Publication 4693-A, A Guide to the Enrolled Agent Program.

Certified Public Accountants – People with this credential are licensed by state boards of accountancy, the District of Columbia, and U.S. territories, and have passed the Uniform CPA Examination. They also must meet education, experience, and good character requirements established by their boards of accountancy. In addition, CPAs must comply with ethical requirements as well as complete specified levels of continuing education in order to maintain an active CPA license. CPAs can offer a range of services; some CPAs specialize in tax preparation and planning.

Attorneys – People with this credential are licensed by state courts or their designees, such as the state bar. Generally, requirements include completion of a degree in law, passage of an ethics and bar exam and on-going continuing education. Attorneys can offer a range of services; some attorneys specialize in tax preparation and planning.

LIMITED REPRESENTATION RIGHTS: Preparers without any of the above credentials (also known as “unenrolled preparers”) have limited practice rights and may only represent clients whose returns they prepared and signed and only at the initial audit level.

NOTE: Registered Tax Return Preparers – Certain preparers became RTRPs under an IRS program that IRS is no longer able to enforce due to a District Court injunction. RTRPs passed an IRS competency test on Form 1040 tax preparation.

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.

Page Last Reviewed or Updated: 10-Feb-2014

Don't Forget:  All paid preparers must have an IRS PTIN and enter it on the returns they prepare.