Who can be a tax preparer?

While those who work in tax preparation are well-versed in this area, many people who go to a tax preparer are unaware of the differences. This post seeks to bring clarity to the different levels of education and certification a tax preparer may have.

Anyone can call themselves a tax preparer

Anyone who has an IRS Preparer Tax Identification Number (PTIN) can work as a paid tax return preparer. There are, however, different levels of education and experience that may be helpful to understand. The IRS does provide a directory of federal tax return preparers.

The 3 tax professionals who can represent their clients before the IRS

While anyone who’s read a book or taken a course on tax preparation can file a return for payment, there are different levels of education, regulation, and experience for various roles. These include:

1. Attorney: An attorney must, in most but not all states, have a law degree from an accredited institution and be licensed in the state or district where they practice. As with most professionals, an attorney must satisfy CLE credits each year. A tax attorney will have focused work on taxes for individuals, small businesses, the government, or large corporations.
2. Enrolled Agent (EA): An enrolled agent has to pass a three-part IRS exam or be an IRS employee. An EA must understand both individual and business tax returns. Some people have enough continuing education credits to be recognized as an Annual Filing Season Program Participant. EAs are licensed by the IRS. As a professional, an EA must complete ongoing continuing education.
3. Certified Public Accountant (CPA): There are accountants who are public accountants and then there are accountants who have taken additional steps to become a state certified. A CPA is an accountant who has passed the state accountant’s exam and has an additional 40 hours of annual professional training. To be a CPA a person must also have been under the direct supervision of another CPA for no less than eight years. Unlike an accountant, a CPA can write audited financial statements. An accountant typically has a bachelor’s degree in accounting and can do forensic accounting. Either can handle tax preparation, but CPAs typically do more complex tax work and are held to more stringent ethical standards.

A tax preparer who is an enrolled agent, a CPA, or an attorney has “unlimited representation rights” before the IRS. An EA can represent their client (the person for whom they filed a tax return) on audits, payment and collection matters, and appeals. All three of the tax preparer classifications described must have an IRS-issued PTIN.