FS-2017-06, April 2017
More than 78 million taxpayers paid someone to prepare their federal tax return in 2016. Generally, anyone who prepares or assists in preparing a federal tax return for compensation must have a Preparer Tax Identification Number (PTIN). They must sign in the paid preparer's area of the return and give the taxpayer a copy of the return. Since 2012, anyone who prepares and files 11 or more Forms 1040, 1040A, 1040EZ or 1041 during a calendar year must use e-file.
Most tax return preparers provide outstanding service, but they have differing levels of skills, education and expertise. Another important difference is their ability to represent taxpayers before the Internal Revenue Service.
Representation rights, also known as practice rights, fall into two categories: Unlimited and Limited Representation.
Return preparers with unlimited representation rights can represent their clients on any matters including audits, payment/collection issues, and appeals. Those with limited representation rights can 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.
Credentialed Return Preparers
Tax return preparers with unlimited representation rights include professionals with the following credentials:
- Attorneys. Licensed by state courts, the District of Columbia or their designees, such as the state bar, and 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.
- Certified Public Accountants. Licensed by state boards of accountancy, the District of Columbia, and U.S. territories, CPAs 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.
- Enrolled Agents. Enrolled agents are licensed by the IRS. They are subject to a suitability check and must pass a three-part Special Enrollment Examination, 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 three years. Enrolled agents generally may represent any taxpayer regarding any tax matter before any IRS office. All enrolled agents must also have a valid PTIN. Learn more about the Enrolled Agent Program.
Annual Filing Season Program
The IRS recognizes the efforts of non-credentialed return preparers who aspire to a higher level of professionalism. To that end, the IRS issues an Annual Filing Season Program Record of Completion to return preparers who obtain 18 hours of continuing education for a specific tax year that includes a six-hour federal tax law refresher course with a test.
Return preparers who participate in the Annual Filing Season Program have limited representation rights and may 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 must participate in the Annual Filing Season Program in both the year of return preparation and the year of representation. They cannot represent clients whose returns they did not prepare. They cannot represent clients regarding appeals or collection issues even if they did prepare the return in question.
Non-credentialed return preparers who do not participate in the Annual Filing Season Program may prepare and file federal tax returns, but cannot represent clients before the IRS.
Researching Tax Return Preparers
The IRS has a searchable, sortable public directory on IRS.gov to research tax return preparers. This directory contains only those with a valid PTIN who hold a professional credential or have obtained an Annual Filing Season Program Record of Completion from the IRS.
The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications contains the name, city, state and zip code of credentialed preparers and Annual Filing Season Program participants. Taxpayers can also research the type of credentials or qualifications held by a specific tax professional. The listings do not serve as an endorsement by the IRS.
Tax Professionals with Specialized Credentials
In addition to attorneys, CPAs and enrolled agents, the IRS recognizes the credentials of two other types of specialized tax professionals who are included in the Directory of Federal Tax Return Preparers. They include:
- Enrolled Actuary - Enrolled actuaries have satisfied the standards and qualifications as set forth in the regulations of the Joint Board for the Enrollment of Actuaries and have been approved by the Joint Board to perform actuarial services required under the Employee Retirement Income Security Act of 1974.
- Enrolled Retirement Plan Agent - Enrolled retirement plan agents (ERPAs) are licensed by the IRS and specifically trained in certain retirement plan matters. ERPAs are subject to a suitability check and must pass a two-part ERPA Special Enrollment Examination. They complete 72 hours of continuing education every three years. ERPAs may represent clients before the IRS on certain retirement plan matters.
The IRS suggests taxpayers always check their tax return preparer’s qualifications and history. Ask about Service Fees before providing records and receipts needed to allow the preparer to determine taxable income, deductions and credits.
Do not use a preparer who will e-file a return using only a pay stub instead of a Form W-2. Taxpayers should review the return and ask questions before signing because they are responsible for the information on the tax return, no matter who prepared it.
Make a Complaint about a Tax Return Preparer
Most paid tax return preparers are professional, honest and trustworthy and the IRS is committed to investigating those who act improperly. Taxpayers can Make a Complaint About a Tax Return Preparer for misconduct, such as:
- Embezzling your refund.
- Altering your tax return documents.
- Filing a return without your consent.
- Creating or omitting income to generate a larger refund.
- Creating false exemptions or dependents to generate a larger refund.
- Creating false expenses, deductions or credits to generate a larger refund.
- Using an incorrect filing status to generate a larger refund.
- Form 14157, Complaint: Tax Return Preparer
- Choosing a Tax Professional
- Understanding Tax Return Preparer Credentials and Qualifications
- Verify the Status of an Enrolled Agent
- Make a Complaint About a Tax Return Preparer
- IRS Tax Pro Association Partners
- Things to Remember When Choosing a Tax Preparer