IRS Recommendations on Choosing A Tax Preparer
While most tax return preparers are professional and honest, taxpayers can use the following tips to choose a preparer who will offer the best service for their tax preparation needs.
- Plan ahead – Choose a preparer you will be able to contact after the return is filed and one who will be responsive to your needs.
- Get references – Ask questions and get references from clients who have used the tax professional before. Were they satisfied with the service received?
- Research – Check to see if the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for Certified Public Accountants (CPA) or the state’s bar association for attorneys. You can contact these organizations by looking in your local telephone directory or on the Internet.
- Determine if the preparer’s qualifications meet your needs – Is the preparer an Enrolled Agent (EA), Certified Public Accountant (CPA) or Attorney? Only EAs, CPAs and attorneys can represent taxpayers before the IRS in all matters including audits, collection actions and appeals. Other return preparers may represent taxpayers only in audits regarding a return they signed as a preparer.
- Ask about tax preparation fees – Try to obtain a clear estimate, preferably in writing, for the preparation and filing services.
- Understand Refund Anticipation Loans (RALs) – RALs come with expensive fees and if you e-file your tax return with the IRS, you can get your full refund directly from the IRS in as few as 10 days – without having to pay any loan fees.
- Obtain a signed copy of your return – It’s key to obtain a signed copy of your tax return from your preparer to protect your tax refund and guard against tax return fraud.
Make sure the preparer signs the return and fills in his or her PTIN (IRS requires all professional preparers to obtain a PTIN) as indicated on the forms.
- Obtain from the preparer a hard or electronic copy of the signed and filed return; keep the copy in case of a problem with the return.
Over promising – Avoid preparers who claim they can obtain larger refunds than other preparers, or those who guarantee refunds or base their fees on a percentage of the refund.
- No follow-up support – Avoid preparers who completely close their offices right after April 15 every year.
- False statements – Avoid preparers who try to persuade you to say something on your tax return that is not true in order to get a bigger refund.
- Blank returns – Avoid any tax preparer that asks you to sign a blank return or requires the refund be sent directly to them.
- Additional services – Avoid preparers who pressure you to buy additional products or services.
Understanding Tax Return Preparer Credentials and Qualifications
Any tax professional with an IRS Preparer Tax Identification Number (PTIN) is authorized to prepare federal tax returns. However, tax professionals have differing levels of skills, education and expertise.
An important difference in the types of practitioners is “representation rights”. Here is guidance on each credential and qualification:
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.
Enrolled Agents – 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.
EA's also have the privilege of representing a taxpayer from any state or territory of the United States before any division of the IRS.
Certified Public Accountants – Licensed by state boards of accountancy, the District of Columbia, and U.S. territories. Certified public accountants 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.
Attorneys – 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.
LIMITED REPRESENTATION RIGHTS: Preparers without one 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. 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.
Annual Filing Season Program Participants – The Annual Filing Season Program is a voluntary program designed to encourage tax return preparers to participate in continuing education (CE) courses. Unenrolled return preparers can elect to voluntarily take continuing education each year in preparation for filing season and receive an Annual Filing Season Program – Record of Completion. The program is important for a number of reasons. It encourages unregulated return preparers who don’t have to meet continuing professional education requirements to stay up to date on tax laws and changes. It helps lessen the risk to taxpayers from preparers who have no education in federal tax law or filing requirements. And it allows preparers without professional credentials to stand out from the competition by giving them a recognizable record of completion that they can show to their clients.
Only AFSP participants who obtain a Record of Completion will have limited representation rights before the IRS for clients whose returns they prepared and signed. PTIN holders without an AFSP - Record of Completion or without other professional credentials will not be able to represent clients before the IRS in any matters.
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, are authorized to prepare tax returns. Currently, non-credentialed (unenroled) preparers have NO represtation rights before ANY division of the IRS.
DIRECTORY OF FEDERAL TAX RETURN PREPARERS WITH CREDENTIALS AND SELECT QUALIFICATIONS: To help taxpayers determine return preparer credentials and qualifications, the IRS has a public directory on the IRS website. The searchable, sortable database contains the name, city, state, and zip code of attorneys, CPAs, enrolled agents, enrolled retirement plan agents, and enrolled actuaries with valid PTINs, as well as AFSP Record of Completion recipients.
Continuing Eduation Requirements
CONTINUING EDUCATION REQUIREMENTS for
Certified Public Accountants in Ohio:
(per Accountancy Board of Ohio)
The basic continuing professional education (CPE) requirement to obtain or renew the Ohio permit is 120 credits over a three-year period. New CPAs holding the Ohio permit are required to report 40 credits over a two-year period. A new CPA licensed in 2011, for example, will have a continuing education reporting period of January 1, 2011 through December 31, 2012 and a requirement of 40 credits.
Continuing education is due on the license renewal date for all Ohio permit holders.
All continuing education reporting periods (24 and 36 months) begin on January 1 and end on December 31.
Continuing education may be earned in any field that contributes to a licensee's professional competence. Registered CPE sponsors agree to conform to the NASBA/AICPA CPE Standards, and this includes keeping appropriate documentation for CPE verification purposes.
Each licensee holding the Ohio permit is responsible for retaining appropriate documentation for all CPE credit claimed. There should be adequate support for completion and CPE credit claimed. Normally, a certificate of completion is issued by the program sponsor as proof of attendance/completion. Some sponsors issue a transcript that serves as documentation for all the programs taken by a licensee from that sponsor.
The following Ohio permit holders must earn 24 CPE credits in accounting or auditing:
- CPAs or PAs who work on financial reporting engagements.
- CPAs or PAs who perform financial reporting work outside public accounting while using the CPA designation ("regulated services").
The following Ohio permit holders must earn 24 CPE credits in taxation:
- CPAs or PAs who work on taxation engagements or provide tax advice to clients.
- CPAs or PAs who perform tax work outside public accounting while using the CPA designation ("regulated services").
All CPAs holding the Ohio permit must take 3 credits in professional standards and responsibilities ("PSR") each reporting period. CPE sponsors that wish to present courses in Ohio professional standards and responsibilities must register with the Board, submit all course materials and qualifications of the instructor or CPE program designers to the Board for review and approval.
A licensee may claim PSR credit for programs in the following four areas if the course is Board approved and documentation is retained: (1) the Ohio accountancy law and rules, (2) the accountancy law and rules of another state, (3) professional ethics for CPAs, or (4) ethical philosophy.
The Administrative Code reference is: http://codes.ohio.gov/oac/4701-15-02
CONTINUING EDUCATION REQUIREMENTS for
Attorneys in Ohio:
(per Supreme Court of Ohio)
SUPREME COURT RULES FOR THE GOVERNMENT OF THE BAR OF OHIO
RULE X. CONTINUING LEGAL EDUCATION
Section 3. Continuing Legal Education Requirements for Attorneys.
(A) Total credit hours. Each attorney admitted to the practice of law in this state and each attorney registered for corporate status pursuant to Gov. Bar R. VI, Section 3 shall complete a minimum of twenty-four credit hours of continuing legal education for each biennial compliance period.
(B) Professional conduct credit hours. As part of the minimum twenty-four credit hours of continuing legal education required by division (A) of this section, an attorney shall complete a minimum of two and one-half credit hours of instruction
IRS Circular 230 regulates the education requirements for Enrolled Agents
Subpart A Section 10.6
- 10.6 Term and renewal of status as an enrolled agent
(2) Renewal period for enrolled agents.
(v) Thereafter, applications for renewal as an enrolled agent will be required between November 1 and January 31 of every subsequent third year
(e) Condition for renewal:
(2) For renewed enrollment as an enrolled agent or enrolled retirement plan agent —
(i) Requirements for enrollment cycle. A minimum of 72 hours of continuing education credit, including six hours of ethics or professional conduct, must be completed during each enrollment cycle.
(ii) Requirements for enrollment year. A minimum of 16 hours of continuing education credit, including two hours of ethics or professional conduct, must be completed during each enrollment year of an enrollment cycle.
(f) Qualifying continuing education —
(1) General —
(i) Enrolled agents. To qualify for continuing education credit for an enrolled agent, a course of learning must —
(A) Be a qualifying continuing education program designed to enhance professional knowledge in Federal taxation or Federal tax related matters (programs comprised of current subject matter in Federal taxation or Federal tax related matters, including accounting, tax return preparation software, taxation, or ethics); and
(B) Be a qualifying continuing education program consistent with the Internal Revenue Code and effective tax administration.
|Profession||Renewal Period||Units (hours) Continuing Education Required||Units of Ethics per Year or Renewal Period||Units of Federal Taxation Related Topics Required|
|Certified Public Accountants (CPA) (Ohio specific)||3 Years||120||3||24 (if the CPA practices in tax)|
|2 Years||24||2 1/2||None|
|Enrolled Agents (EA)
(not state specific)
|3 Years||72||2 per year 6 minimum per renewal period)||66|
Do you know if your preparer is legitimate?
There are clues:
If you pay anyone to prepare your return, they MUST have a PTIN
(Preparer Tax Identification Number).
The PTIN is formatted as P00000000
an eight digit number preceded by the letter "P".
If you suspect your preparer was not a legitimate paid preparer,
take a look and see if they put their PTIN on the return.
Look for the section called "Paid Preparer Use Only". Look for the box with the heading PTIN
The number in the box should be a P followed by 8 numerals.