Understanding Tax Return Professional Credentials and Qualifications

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More than 78 million people who pay taxes utilize the services of tax professionals to prepare their tax returns. Generally, any tax professional with an IRS Preparer Tax Identification Number (PTIN) is authorized to prepare federal tax returns.

Most tax professionals provide top-notch services but have varying levels of expertise, skills, and educational background. One significant difference that sets them apart is their “representation right,” also known as practitioner rights. These rights include their ability to represent their clients before the Internal Revenue Service (IRS). LastPass – Family or Org Password Vault

These rights fall into two categories, unlimited representation and limited representation. The unlimited representation rights, as the name says, allow tax practitioners to represent their clients in any matter: audits, bookkeeping, related payment or collection issues, and appeals, to name a few.

On the other hand, limited representation rights only allow the professional to represent their clients whose returns are prepared and signed by them and only before revenue agents, representatives of customer service, and IRS employees like the Taxpayer Advocate Service.

Comprehensive Guide to Credentials and Qualifications

Unlimited Representation Rights

Certified Public Accountants (CPAs), Enrolled Agents (EAs), and attorneys have unlimited representation rights before the IRS.

Certified Public Accountants

Certified Public Accountants (CPAs) complete the Uniform CPA Examination. Moreover, they have studied for a bachelor’s degree with at least 150 hours of formal education and gained experience under a licensed CPA. ADP. Payroll – HR – Benefits

They must adhere to their board’s ethical and good character requirements and complete continuing professional education to maintain their professional competence and, most importantly, their CPA license.

They may provide a variety of services, for example, audit, consultancy, forensic, and specialized tax planning and preparation.

Enrolled Agents

The IRS licenses Enrolled Agents (EAs). They must pass a three-part comprehensive enrollment exam that tests their proficiency in federal tax planning, representation, and tax return preparation for individuals and businesses.

They are also subject to suitability checks and must complete 72 hours of continuing education every three years.

Attorneys 

State courts license attorneys. They have completed a law degree and also passed a bar exam. They have ongoing continuing education and standards of professional character.

Though attorneys can offer a wide range of services, some specialize in tax planning and preparation.

Limited Representation Rights

Tax practitioners with limited representation rights include Annual Filing Season Program Participants and PTIN Holders.

Annual Filing Season Program Participants 

Annual Filing Season Program Participants is a voluntary program that recognizes the efforts of the individuals preparing tax returns who are not CPAs, EAs, or attorneys. This program was mainly designed to encourage education and prepare taxpayers for filing season. Download A Free Financial Toolkit

The IRS issues the Annual Filing Season Program Record of Completion to return preparers who complete a specific number of continuing education hours in preparation for a given tax year.

PTIN Holders 

Preparers of tax returns with a Preparer Tax Identification Number (PTIN), but no professional credentials and non-participants of the Annual Filing Season Program, are also allowed to prepare tax returns.

However, this is the only authority that PTIN holders have. They cannot represent clients before the IRS (this rule does not apply to returns they prepared and filed on or before December 31, 2015).

Directory of Federal Tax Return Professionals with Credentials and Select Qualifications

The IRS has a searchable and sortable public directory that contains certain tax professionals to help taxpayers determine the credentials and qualifications of their tax preparer.

The database contains the name, state, city, and zip code of tax practitioners with both limited and unlimited representation rights.

Reminder

All practitioners and individuals must have an IRS-issued PTIN to be eligible to prepare their tax returns lawfully. Furthermore, the IRS suggests checking the history and qualifications of their tax preparers and setting the terms before starting an arrangement to ensure that no discrepancies occur in your filing process.

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