Tax Preparer License
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Tax Preparer License

By Mark Castro, CPA


How to get a tax preparer license

At the present time, an individual does not need a license from the IRS to prepare tax returns. California, Maryland, New York, and Oregon regulate tax preparers, while Connecticut, Nevada, and Illinois require registration or other requirements for tax return preparers.

Professional Taking a test

PTIN Requirement

All tax preparers that are paid to prepare or assist in preparing federal tax returns or claims for refund must have a PTIN. This includes enrolled agents and Attorneys and CPAs who are compensated for preparing federal tax returns.

How to Get a PTIN

Tax preparers need to go to the IRS Tax Professional PTIN System page on the IRS website and click on New User, and follow the prompts to setup an account and go through the process of obtaining a PTIN. There is a fee of $35.95 to either renew or obtain a PTIN. A PTIN is good for one calendar and must be renewed each year.

 

EFIN Requirement

Any provider that electronically files tax returns must obtain a EFIN from the IRS. The EFIN is assigned to a firm if it is for a company or to the individual if they are a sole proprietor.

How to get an EFIN

To obtain an EFIN a provider must have an IRS e-Services account and complete the IRS e-file Application to become an Authorized IRS e-file Provider. Once the application is completed and the provider passes a suitability check the IRS will send them an acceptance letter.

For more information see the following on the IRS website:

 

Do you need a license to prepare tax returns

A tax preparer does not need a license to prepare tax returns at the federal level.

There are testing, continuing education, and registration requirements in the states of Maryland and Oregon. There are continuing education and registration requirements in California and New York. Oregon is the only state that licenses tax return preparers. California, Connecticut, Maryland, Nevada, and New York register tax return preparers.

7 Licensese States

The following States require tax return preparers to complete continuing education each year and register and pay a fee each year:

California

California law requires anyone, who for a fee or other consideration, assists with or prepares tax returns for another person and is not an exempt preparer to register as tax preparer with California Tax Education Council (CTEC).

Exempt preparers are CPAs, Enrolled Agents, Attorneys or Specified banking or trust officials.

To become a California registered tax preparer, an individual must:

  • Complete a 60-Hour Qualifying Education Course from a CTEC Approved Provider.
  • Obtain a PTIN from the IRS
  • Purchase a $5,000 tax preparer surety bond
  • Complete online CTEC registration and pay the $33 registration fee

Each registered preparer must renew their registration each year by doing the following:

  • Take a minimum of 20 hours of continuing education
  • Renew their PTIN with the IRS
  • Maintain a $5,000 tax preparer bond
  • Renew their registration and pay the $33 annual registration fee before October 31 of each year.

For more information see the Registered Tax Preparers page on the California FTB website.

New York

All individuals who prepare New York State tax returns must register with New York. If they prepare 10 or more returns, they must pay a $100 registration fee.

All tax return preparers must complete continuing education as follows:

  • Preparers registering for the first time must have completed a 16-hour basic tax course
  • After the initial registration, preparers must complete 4 hours of Continuing Education each year.

For more information see the Tax preparer and facilitator registration and continuing education page on the New York Department of Taxation and Finance website.

 

The following States require a tax preparer to pass an exam and then register and pay a registration fee. They must also complete continuing education and pay a fee to renew their registration:

Maryland

All individuals who prepare tax returns in Maryland must pass the Maryland Tax Preparers Examination to qualify for registration with the Maryland Board of Individual Tax Preparers. The only exception is for exempt professionals such as CPAs, Enrolled Agents, and Attorneys.

Registered preparers must renew their registration every two years and complete at least 16 hours of continuing education. Four of the 16 hours must be in Maryland state tax-related subjects.

The registration fee for original applications and renewals is $100.

For more details see the Maryland Board of Individual Tax Preparers website.

Oregon

Any individual that prepares personal income tax returns for a fee must be licensed by the Oregon State Board of Tax Practitioners.

In order to obtain a license, tax return preparers (referred to as Tax Consultants) must first complete an approved 80-hour course in basic income tax law and then take and pass the Oregon Exam for Tax Preparers.

After receiving their license, the tax preparer must renew their license each year. In order to renew they must complete 30 hours of Continuing Education that is related to the preparation of income tax returns.

The cost for the initial license is $65 and the renewal fee is $95 per year.

For more information see the Oregon Board of Tax Practitioners website.

 

States with registration or other requirements for tax return preparers:

Connecticut

All individuals who are paid to prepare more than 10 Connecticut or income tax returns or more than 10 federal income tax returns for a Connecticut taxpayer must obtain a permit from the Connecticut Department of Revenue Services.

In order to receive a permit, the preparer must:

  • Have IRS PTIN
  • Present evidence that they have experience, education, or training in tax preparation services
  • Have a certificate of completion for the IRS Annual Filing Season Program
  • Pay an initial application fee of $100 and renewal fee every 2 years of $50

For more information see the following on the Connecticut Department of Revenue Services website:

Nevada

An individual who prepares a federal or state tax return must register with the Nevada Secretary of State.

They will register as a document preparation service and pay a $50 fee. They also must obtain a $50,000 surety bond. They also must register each year.

For more information see Document Preparation Services page on the Nevada Secretary of State website.

Illinois

Any tax preparer who is paid to prepare Illinois individual or business income tax returns must enter their PTIN number on all returns that they prepare.

For more information, see the Paid Preparer’s PTIN Requirement page on the Illinois Department of Revenue website.

 

All other States do not require tax return preparers to register, pay a fee, or complete continuing education in order to prepare tax returns in their state.

 

Can you prepare taxes without a license

Tax preparers only need a license in Oregon. All other states do not require a tax preparer to have a license to prepare tax returns.

However, there are registration, testing and continuing education requirements in California, Maryland, and New York for tax preparers. Connecticut and Nevada require tax preparers to register and Illinois requires preparers to enter their PTIN on any returns they prepare.

Tax Preparer Look up Tool

The IRS has a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications that allows anyone to search for preparers that have a PTIN and are a CPA, Enrolled Agent, or have a certificate of completion for the IRS Annual Filing Season Program.
The following States have a way to verify that preparers in their State are registered or not as follows:

  • Find/Verify California tax preparers that are registered with the California Tax Education Council (CTEC). If the preparer is a CPA, Attorney or Attorney are not included since they are exempt from registering with CTEC.
  • New York Verify your tax return preparer is registered in the State of New York on the New York Department of Taxation and Finance website.
  • Maryland Tax Preparer Public Query – Look up preparers that are registered with Maryland.

Representation Rights

Any tax preparer with a PTIN is authorized to prepare federal tax returns.

However, depending on whether they are a credential or have completed the IRS Annual Filing Season program will determine what representation rights they have.

Unlimited Representation Rights

Enrolled agents, certified public accounts (CPA), and attorneys have unlimited representation rights before the IRS. Tax preparers with these credentials may represent their clients on all tax matters including audits, payment/collection issues and appeals.

 

Limited Representation Rights

Preparers that are not an Enrolled Agent, CPA or attorney and have received a Record of Completion for the IRS Annual Filing Season Program have limited representation rights. They may only represent their clients whose returns they have prepared and signed, but only before revenue agents, customer service representatives, and similar IRS employees. They cannot represent taxpayers whose returns they did not prepare and they cannot represent taxpayers regarding appeals or collection issues even if they did prepare the tax return in question.

If a preparer is not credentialed or has not completed the IRS Annual Filing Season Program, they have no authority to represent their clients before the IRS. They are only authorized to prepare tax returns.

For more information see Understanding Tax Return Preparer Credentials and Qualifications of the IRS website.

Enrolled Agents

An enrolled agent is an individual who has passed the IRS three-part comprehensive test covering individual and business tax returns. Once they have passed the test they must apply for enrollment and pay the enrollment fee.

Becoming an enrolled agent, the individual has the ability to represent taxpayers before the IRS.

Enrolled agents must adhere to ethical standards and complete 72 hours of continuing education every three years.

For more information see the following on the IRS website:

Attorney

These are individuals who are licensed by state courts, the District of Columbia or their designees, such as the state bar. They have usually earned a degree and passed a bar exam. They also must complete continuing education annually and comply with professional character standards.

Certified Public Accountants

An individual who is licensed by state boards of accountancy, the District of Columbia, and US territories. CPAs must 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. Also, CPAs must comply with ethical requirements and complete continuing education to maintain an active CPA license.

 

Software to File Returns

In addition to needing to complete certain testing and licensing requirements in some states to prepare tax returns, tax preparers also need to use tax software that is approved for Electronic Filing by the IRS. Professional tax software companies must pass IRS requirements for Modernized e-File Assurance Testing.

The Assurance Testing includes a series of test scenarios the professional tax software company uses after notifying the IRS and providing a list of forms they plan to include in their software. After creating test tax returns and transmitting them to the IRS and they pass the IRS testing for required functions, it is approved for electronic filing.

Learn more about how tax preparation software is approved for electronic filing.

CrossLink Software

CrossLink Professional Tax Software

Once a tax preparer is ready to begin preparing returns and has completed all applicable testing and licensing requirements, they need to purchase a trusted and reliable professional tax software. CrossLink is the best tax software in the industry for professional tax preparers. Providing tax software and solutions for tax professionals ranging from single offices to tax franchises and service bureaus, CrossLink has the right tax software solution for any professional tax preparation setup.

With both desktop and online solutions, CrossLink has what tax professionals need to ensure the success of their business while serving the needs of their community. CrossLink is committed to your success and has worked closely with our customers, banking partners, and other industry leaders to provide tax professionals with more revenue opportunities to enable their success.

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