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Understanding Tax Preparers Credentials and Qualifications

An IRS Preparer Tax Identification Number, PTIN, indicates that a tax professional is authorized by the IRS to prepare individual and corporate taxes. PTIN, however, does not differentiate their levels of education, expertise and skills to provide this service. A preparer’s qualifications is determined by their “representation rights” and a tax professional, either has Unlimited or Limited Representation Rights. To understand the difference between Unlimited and Limited representation rights, the guideline below provides information on each qualification and credential:

 

Unlimited Representation Rights

The IRS labels certified public accountants, enrolled agents and attorneys as unlimited representation rights. Unlimited representation rights mean that a professional holding this status or credentials can represent taxpayers on any matter such as appeals, payment or collection issues and audits.

      Certified Public Accountants - A certified public accountant is licensed by state boards of accountancy, U.S. territories and the District of Columbia. Certified accountants studied accounting at the university level and passed the Uniform CPA Examination. These tax professionals also meet good character requirements as specified by their respective accountancy boards. There are ethical requirements that CPAs must comply, as well as, continuing education courses they must complete in order for them to remain certified. Due to these strict requirements, certified public accountants receive unlimited representation rights.

      Enrolled Agents - These agents are certified by the IRS and must pass a three-part Special Enrollment Examination, as well as, subject to a suitability check. Agents who sit for the Special Enrollment Examination must show competence in representation, business and individual tax, tax return preparation and federal tax planning. In order for enrolled agents to remain license tax professionals, every three years, they must complete 72 hours of continuing education.

      Attorneys - are certified tax preparers who receive their licensed from their designees (the bar), the District of Columbia or the state courts. Attorneys are certified lawyers who received their degree in law and passed the bar exam. Attorneys are required to have a regular continuing education and must meet and adhere to certain professional character standards. They are certified to offer various services such as tax planning and preparation.

 

Limited Representation Rights

Tax preparers with a limited representation rights status are also known as unenrolled preparers. These individuals, as the name suggests, have limited rights within the tax profession and can only represent those clients they worked for preparing their taxes; however, they can only do so in the presence of customer service representatives, revenue agents, or other IRS employees such as the Taxpayer Advocate Service. Although tax preparers with limited status can represent clients whose tax they prepared, they cannot represent them in cases of collection issues or appeals.

      PTIN Holders - A tax preparer with a valid IRS Preparer Tax Identification Number, PTIN, and who participates in the annual filing season program has limited representation rights. They are authorized to prepare tax, even though they do not have any professional credentials. In previous years (2015 and prior), PTIN holders who did not participate in the annual filing season program had limited representation rights; however, beginning January 2016, the IRS states that only those preparers who participates in the annual filing season will hold this status.

      Annual Filing Season Program Participants - This category includes tax preparers who do not fall under the category of certified public accountants, attorneys or enrolled agents. This is a voluntary program that authorizes individuals who have completed a certain number of continuing education hours within a specific tax year with what is known as an Annual Filing Season Program Record of Completion.

 

As an IRS requirement, all tax preparers must have a PTIN, which should be included when your return is filed with the IRS. If the tax preparer you use to file your taxes does not have a PTIN, they are not authorized to prepare your tax returns and may use your information for their personal gain. To avoid using an unauthorized individual to prepare your taxes, ask questions and request proof of certification and licensing.


You can also find a list of authorized tax preparers on the IRS website. Be mindful, however, that not all preparers are listed. If you need professional tax preparers to help with preparing your taxes, Rincon Controller and Tax Services provide professional and certified tax services throughout Carpinteria. It is easy to find a Carpinteria tax preparer; however, not all are equal; therefore, it is crucial you choose your tax preparer wisely.

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