Tax Preparers: Roles & Qualifications

Tax Preparers Roles & Qualifications- Complete Controller

Tax preparers help millions of people prepare and file their taxes every year. With their experience and expertise, they ensure their clients pay the exact amount of tax to the government. A tax professional with an IRS Preparer Tax Identification Number (PTIN) has the authority to prepare a federal tax return. However, a tax preparer’s skills, education, and expertise vary from case to case.

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What is the Role of a Tax Preparer? 

Tax preparers prepare and assist with general tax forms. They can also help defend taxpayers against the IRS, including audits and tax-paying-related issues. However, this depends on the tax preparer’s credentials and representative rights.

The tax preparer serves the clients and the IRS. While doing their clients, they must follow the rules of the IRS. And assist the client in minimizing the client’s tax burden and complying with the state and federal tax codes.

There are two categories of rights: unlimited representation and limited representation. Absolute representation rights allow tax practitioners to represent their clients in any matter, such as audits, payments, bookkeeping, and appeals.

Limited representation allows the professional to present those clients whose returns they prepared and signed and only before revenue agents, representatives of customer service, and similar IRS employees, including the Taxpayer Advocate Service.

Why Become a Tax Preparer?

Tax preparers enjoy many benefits throughout their careers, such as increased job security, salary, extensive client base, flexibility, and lifelong learning. But what do you need to become a tax preparer? What sort of qualifications do you need? 

What do You Need to Become a Tax Return Professional?

To become a tax return professional, you must follow these basic requirements:

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Learn the Ins and Outs of the Business

Learning an entirely new professional language is essential for new tax return professionals. In some cases, you are required to have proper certification. In addition, you must find a platform that can assist you in gaining knowledge.

Access to the Right Technology

Access to the right technology helps you succeed in your business. Most tax return professionals use software to help grow their businesses.

Attracting Tax Clients

It might sound like an obvious step, but you must attract tax clients to succeed and profit from your business. You can start it from a small scale, like doing individual returns, before moving to more extensive and complicated matters.

Preparer Tax Identification Number

You must apply for a tax identification number (TIN) to get paid. 

Brief and Comprehensive Guide to Credentials and Qualifications

The requirements for becoming a tax preparer vary from state to state. The following guidelines can help you understand the process. 

Unlimited Representation Rights 

Enrolled agents, Certified Public Accountants (CPAs), and Tax Attorneys have unlimited representation rights before the IRS.

Enrolled Agents

Across the country, they have the most extensive licensing provided by the IRS. An enrolled agent is a registered tax return that must pass a three-part comprehensive enrollment exam covering individual and business taxes and representation issues. They also must undergo 72 hours of additional education every year.Cubicle to Cloud virtual business

Certified Public Accountants (CPAs)

They have studied for a bachelor’s degree with 150 hours of formal education. They must pass the Uniform CPA Examination.

To maintain their CPA license, they must follow their board’s ethical rules and requirements and continue their professional education. Many of them also specialize in tax planning or return preparation.

Tax Attorneys

After earning a law degree and passing the bar exam, attorneys get their state court or bar licenses. They can prepare a legal defense for a client in case of a tax-related course.

Limited Representation Rights Annual Filing Season Program Participants

This program is specially designed to recognize individuals preparing tax returns who are not enrolled agents, CPAs, or tax attorneys. It raises knowledge, professionalism, and education among the participants. These participants must earn eighteen continuing education credits from IRS providers and pass an exam. To maintain their AFSP credential, they must take fifteen continuing education credits each year. 

Preparer Tax Identification Number Holders (PTIN)

Tax return preparers with preparer tax identification numbers but no professional credentials are also allowed to prepare tax returns. They do not have the authority to represent their clients.

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