Understanding Tax Return Preparer Credentials and Qualifications

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. Learn more about 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 may 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 a bar exam and 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 any 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.

COMING SOON! Annual Filing Season Program – Record of Completion – Beginning for Filing Season 2015, unenrolled return preparers may opt to participate in an IRS program designed to encourage education and filing season readiness. After meeting program requirements, they will be issued an Annual Filing Season Program – Record of Completion. Learn more about the new program.  

DIRECTORY OF FEDERAL TAX RETURN PREPARERS WITH CREDENTIALS AND SELECT QUALIFICATIONS: To help taxpayers determine return preparer qualifications, the IRS will launch a public directory on the IRS website by January 2015. The searchable, sortable database will contain the name, city, state, and zip code of attorneys, CPAs, enrolled agents, enrolled retirement plan agents, and enrolled actuaries with valid PTINs for 2015, as well as AFSP Record of Completion recipients.

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.