Become a Tax Preparer

An overview of how to get set up with the IRS and with Drake

Below are the most important steps you’ll need to take to become a professional tax preparer. The steps we cover are unique to tax preparation, especially meeting IRS requirements.

The information presented here applies to any new tax preparation business, whether you’ll be a solo preparer or will have a much larger staff.

We’re going to cover the five steps below, presented in the order you’ll probably have to do them, or that makes the most sense for doing them.


1. Get an EFIN for Your Firm

These days, becoming a tax preparer is usually synonymous with e-filing. In fact, if you file 11 or more returns—or expect to—the IRS wants you to e-file. Becoming an e-filer takes three steps:

  • Get an IRS e-Services Account for each principal or responsible person in your firm (see Pub 3112, pp. 8–9, for definitions).
  • Apply to become an Authorized IRS e-File Provider, also known as an Electronic Return Originator (ERO). The application is done online in your e-Services Account.
  • Pass an IRS suitability check. The IRS looks into the backgrounds of the applicant and each principal or responsible person on the application. It may check criminal records, credit reports, tax filing compliance, as well as prior e-filing compliance.

This process can take up to two months, and applying to become an ERO (step 2) takes most of that time, 4 to 6 weeks on average. So it’s best to not procrastinate until late in the calendar year, because if the IRS gets a backlog of applications at that time of year, you could face a delay in being able to e-file live returns.

Once approved, your firm will receive an Electronic Filing Identification Number, or EFIN. This number identifies the firm as the sender of any e-filed returns.

If you don’t already have an EFIN when you purchase Drake Tax, you’ll be assigned a temporary EFIN, which you can use to test e-filing. You'll also use the temporary EFIN as your username when signing into the Drake Support website and using other Drake web-based tools. Remember, before you can e-file actual customer returns, you must apply for an EFIN with the IRS.

When you receive your EFIN, provide your E-File Application Summary with a status of "Completed" to Drake Software. Watch this video for important information.

You may send the EFIN document by:

You will receive a confirmation email once your document has been accepted and uploaded on your account. Please allow 4 hours for processing.

E-filing State Returns

Usually, getting an EFIN also enables you to e-file state returns, but you should know that some states have different or additional e-file requirements. For example, some states “encourage” e-filing much more forcefully than other states, and may even go so far to penalize preparers who send a paper return without a good reason.

A handful of states also require preparer registration at the state level: California, Maryland, New York, Oregon, and Virginia. So if you’re a preparer in one of these states, see your state’s tax department website for registration details. (A registration is not required to prepare a return for one of these states if your business is not located in the state.)


2. Get a PTIN for Each Preparer

Just as each firm that e-files must register with the IRS and get an EFIN, each paid preparer must also register and get a Preparer Tax Identification Number (PTIN). If you are paid to prepare or to help prepare a return — even if you don’t sign it — the IRS requires you to get a PTIN. The key factor is whether you take an action or make a decision that affects the outcome of the return.

PTINs are issued for one calendar year, and must be renewed annually.

For details on who is required to have a PTIN, see PTIN Requirements for Tax Return Preparers.

How to Apply for a PTIN

  • Online - You can get a PTIN online in about 15 minutes at www.irs.gov/ptin.
  • By mail - Complete and print Form W-12. This option takes 4–6 weeks. Send the form and a check or money order for the fee to:

    IRS Tax Pro PTIN Processing Center
    104 Brookeridge Drive #5000
    Waterloo, IA 50702

PTIN-Related Questions

If you apply by mail and have not heard from the IRS within 6 weeks, you may call the PTIN help phone number to check on the status of your application:

Primary: (877) 613-PTIN (7846)
TTY: (877) 613-3686
International (Toll): +1 915-342-5655

Hours: Monday – Friday, 8 am – 5 pm (CST)

3. Get Drake Tax Software

Since being an e-filer requires submitting returns with a computer, you’ll need tax software for preparing and e-filing returns. When you comparison shop, we’re confident you’ll see these benefits to choosing Drake Tax as your tax software:

  • Drake Tax is an all-in-one solution, allowing you to prepare any tax return, personal or business, federal or state, as well as many cities and localities. There are no extra modules or packages to buy, ever.
  • There’s nothing extra to buy to offer e-filing or bank products.
  • Drake also has workflow tools to help you run your practice: Drake Accounting, Drake Documents, and Drake Tax Planner. (Drake Accounting is included for free with the Unlimited version of Drake Tax, or is available for $295 if you purchase the Pay-Per-Return version. Drake Documents and Drake Tax Planner are included free with either version.)
  • Drake has many setup options and built-in practice management features to help you run the software and your practice just the way you want.
  • Drake provides unequaled, U.S.-based customer support, which will usually answer your call in less than 10 seconds.
  • All in all, Drake is the best deal in the industry.

Our free Evaluation Package includes a demo copy of Drake Tax, which you’ll be able to use to learn entering data and preparing returns, as well as to explore all of Drake’s built-in client management features.

4. Get Training

Other than getting an EFIN and PTIN(s), plus getting Drake Tax, you'll need training. Tax laws and professional responsibilities are always changing, making it essential to stay educated and informed. Drake Software provides numerous training opportunities, including many that allow you to earn Continuing Professional Education (CPE) credits.

Web-based Training

DrakeETC.com — Drake's e-Training Center (ETC) is an online Drake-related training resource. Enhance your tax knowledge and earn CPE by taking online tax courses and webinars. Drake customers benefit from our wide range of tutorials, instructional videos, and practice returns for Drake Software products. Test your knowledge by taking quizzes and end-of-course exams. With progress-tracking tools and interactive testing, ETC makes it simple to see your results. Track individual and team progress with the Report Card – administrators can monitor training progress for their entire staff. Make sure everyone in your office is prepared for a great tax season with Drake.

DrakeCPE.com offers quality CPE-eligible courses that are affordable and flexible enough to fit any schedule. Choose from a variety of e-learning formats that suit your learning style and schedule.

  • On-Demand Webinars, which are webinar recordings that you view at your convenience, and take a test to earn CPE
  • Self-Study Courses, where you learn about a topic on your own schedule, at your own pace, and take a test to earn your CPE

Use DrakeCPE.com to complete your Annual Filing Season Program (AFSP) CPE requirements. The IRS AFSP is a voluntary program to recognize the efforts of non-credentialed tax return preparers who aspire to a higher level of professionalism.  Preparers who voluntarily meet annual requirements outlined by the IRS are awarded an Annual Filing Season Program Certificate of Completion. They are also listed in a public database of credentialed preparers and will have limited representation rights before the IRS. Complete a standalone Annual Federal Tax Refresher (AFTR) course or choose from a variety of bundles to suite your CPE and learning style needs.

Classroom Training

Classroom training events are presented live as well as by webcast.

Visit Training.Drakesoftware.com to find and register for these events:

  • Classroom Training — Offered in the summer and early fall to help new users learn Drake Tax and Drake Accounting in a classroom environment.
  • Drake Update Schools — Offered each fall at various locations, the Drake Update Schools provide changes in tax law for the upcoming tax season, the latest in industry news, enhancements made to the software, and more.

Videos

Software Manuals

  • Evaluation Guide — A step-by-step tour of the software, with instructions for preparing 1040, 1120 and 1065 returns. Answer review questions along the way and finish by testing your new skills.
  • Drake Manual — Complete guidance and step-by-step instruction.


5. Where to Go Next

We have lots of other information that is particularly relevant to new preparers or new preparation businesses. Click the links below to find out more about us and what we offer to the professional tax preparer:

  • Products — Make sure you check out our other offerings and supporting products, including Drake Web-based Solutions (online tax return software), Drake Portals (SecureFilePro) (online client document storage), and GruntWorx (scan taxpayer documents and import into a return in Drake Tax).
  • Practice Management — Tools and resources that let you run your software and your practice just the way you want, and help you work better with staff and customers.
  • Build Your Practice — Increase your revenue by offering flexible payment and refund options, as well as  extra client services.
  • Pricing and Purchasing — Drake Tax is available in Unlimited and Pay Per Return versions, as well as bundled with Drake Accounting.

Talk to Us

Drake is dedicated to being a partner after the sale, to serving you and helping you grow as a business. Need more information? Our helpful and knowledgeable sales representatives are standing by to help. Just call (800) 890-9500.