If you are a tax accountant or want to become one, the many different types of tax preparers can feel overwhelming. How do you choose the right one for your workflow and tax firm? Let’s look at different tax agents to see which category best fits your needs and goals.
How to become a tax preparer—getting a PTIN
To kickstart your career as a paid preparer, you need to secure an IRS Preparer Tax Identification Number (PTIN). A PTIN is the number that identifies you to the IRS as someone who prepares a tax return on behalf of someone else. Include your PTIN on any tax returns that you prepare.
Applying for a PTIN is simple and only costs around $20. To get started, go to the IRS Tax Professional PTIN System and create an account. For most applicants, getting a PTIN online takes about 15 minutes.
With your new PTIN in hand, it’s time to look at different levels of tax preparer rights and accreditation. One significant distinction among practitioners is their "representation rights" before the IRS. The rights, education, and expertise of tax preparers vary, so let’s look at the different levels.
Professionals with no tax preparer certification
Tax pros who only have a PTIN number and no additional certification are considered an “unregistered preparer.” These individuals can prepare returns professionally, but they can’t represent clients before the IRS for audits, payment or collection issues, or appeals (except for returns filed before January 1, 2016). The lack of representation rights won’t prevent you from being a tax professional, but it may cause potential clients to consider hiring someone else to prepare their tax returns.
If you are an unregistered tax preparer who wants to stand out in a crowd, consider joining reputable professional associations, such as the National Association of Enrolled Agents (NAEA) or the American Institute of CPAs (AICPA). Membership in these organizations often signifies adherence to ethical standards and ongoing professional development, which can boost your reputation with prospective clients.
What is the Annual Filing Season Program? Participating in the AFSP
Designed to enhance competency and promote ethical standards among tax preparers, the AFSP offers a pathway for non-credentialed preparers to demonstrate their proficiency and differentiate themselves in a competitive market.
Participation in the AFSP mandates that tax preparers complete a set number of continuing education credits annually. These credits cover many topics, including updates on tax laws, ethical standards, and federal tax regulations. By keeping abreast of these changes, preparers equip themselves to deliver precise and dependable services to their clients.
Participants are also required to undergo an annual federal tax refresher course. This course acts as a comprehensive review of fundamental tax concepts and updates, ensuring that preparers are well-prepared to navigate common tax scenarios and prepare accurate returns with confidence.
Upon fulfilling the educational requirements, tax preparers receive a prestigious Annual Filing Season Program Record of Completion from the IRS. This certification serves as a testament to their unwavering commitment to professional development and ethical conduct.
The AFSP empowers unregistered tax preparers to stand out in a competitive marketplace. Displaying the Record of Completion signals to clients that the preparer is dedicated to upholding the highest standards of professionalism and is well-versed in the latest tax laws and regulations. The program also opens doors to a wealth of valuable resources for tax preparers, including access to IRS publications, online tools, and educational materials.
Participants in the AFSP have some limited representation rights, but they can only represent clients before specific IRS employees on matters related to any returns they prepared.
What is an EA? How to become an Enrolled Agent
Enrolled Agents are federally-authorized tax practitioners empowered by the U.S. Department of the Treasury to represent taxpayers before the IRS.
Becoming an Enrolled Agent is a rigorous process that requires dedication, education, and professional experience. Once a tax preparer has a PTIN, they must pass the Special Enrollment Examination (SEE), a comprehensive three-part exam administered by the IRS. The exam covers individual taxation, business taxation, and representation, practice, and
procedures. Achieving a passing score on all three parts of the SEE is essential to becoming an Enrolled Agent.
In addition to passing the SEE, candidates must also satisfy one of two experience or education requirements:
· Obtain a minimum of five years of experience working for the IRS in a position that regularly applied and interpreted tax laws and regulations, or
· Complete at least 72 semester hours of college-level coursework in accounting or related fields from an accredited institution, including specific courses in taxation.
After successfully passing the SEE and meeting the experience or education requirement, candidates can apply for enrollment as an Enrolled Agent using Form 23, Application for Enrollment to Practice Before the Internal Revenue Service. The application process includes a thorough background check conducted by the IRS.
Once enrolled, EAs must renew their enrollment every three years and fulfill continuing education requirements to maintain their status. This includes completing 72 hours of continuing education credits every three years, with a minimum of 16 hours earned annually.
Becoming an Enrolled Agent offers numerous benefits for tax preparers seeking to advance their careers and enhance their professional standing. EAs have the authority to represent taxpayers before all administrative levels of the IRS, providing invaluable support and advocacy. The “enrolled agent” status instills confidence in clients and employers alike and opens diverse career opportunities, including roles in public accounting firms, government agencies, and private practice.
By mastering the rigorous requirements and earning the prestigious Enrolled Agent credential, you can position yourself as a trusted tax expert and advocate for your clients' financial well-being. Whether you're just starting your career or seeking to advance to new heights, the path to becoming an Enrolled Agent is paved with opportunities for growth, success, and professional fulfillment in the dynamic field of tax preparation.
What is a Certified Public Accountant? How to become a CPA tax preparer
Certified Public Accountants (CPAs) are licensed accounting professionals who have met specific education, experience, and examination requirements set forth by state boards of accountancy. In addition to tax preparation, CPAs provide a wide range of financial
services, including auditing, financial planning, and consulting, making them versatile and highly sought-after professionals in the business world.
Becoming a CPA is a multifaceted journey that requires dedication, perseverance, and a commitment to excellence. After completing a bachelor's degree in accounting or a related field from an accredited institution, applicants must pass the Uniform CPA Examination, a comprehensive four-part exam administered by the American Institute of Certified Public Accountants (AICPA). The exam covers four key areas: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). Achieving a passing score on all four sections of the CPA exam is essential to becoming a licensed CPA.
In addition to passing the CPA exam, most state boards of accountancy require candidates to gain professional experience in accounting under the supervision of a licensed CPA. The specific experience requirements vary by state but typically range from one to two years of relevant work experience. Some state boards of accountancy also require candidates to pass an ethics exam or course that covers the AICPA's Code of Professional Conduct and other ethical standards relevant to the accounting profession.
Upon fulfilling the education, examination, and experience requirements, candidates can apply for licensure as a CPA with their state board of accountancy. Once licensed, CPAs must adhere to continuing education requirements to maintain their licensure and stay abreast of developments in the accounting profession.
Achieving CPA licensure demonstrates a high level of expertise and proficiency in accounting, taxation, and financial management, instilling confidence in clients and employers. Career opportunities in public accounting firms, government agencies, corporations, and nonprofit organizations can also be pursued with a CPA licensure.
Becoming a Certified Public Accountant is a challenging yet rewarding journey that offers aspiring tax preparers the opportunity to elevate their careers, expand their skill set, and make a lasting impact in the financial world.
What is a tax attorney? How to practice tax law
Tax Attorneys are legal professionals who specialize in tax law, providing guidance, representation, and strategic advice to individuals, businesses, and organizations navigating complex tax issues. Renowned for their intricate understanding of tax codes and regulations, Tax Attorneys play a pivotal role in helping clients minimize tax liabilities, resolve disputes with tax authorities, and ensure compliance with legal requirements.
Becoming a Tax Attorney begins with a bachelor's degree from an accredited institution. While undergraduate majors vary, aspiring Tax Attorneys often pursue degrees in accounting, finance, or pre-law to build a strong foundation in relevant subject areas.
After completing their undergraduate studies, aspiring Tax Attorneys must attend an accredited law school to earn a Juris Doctor (JD) degree. Law school curriculum covers a broad range of legal topics, including contracts, torts, constitutional law, and taxation.
During law school, aspiring Tax Attorneys can focus on tax law through specialized coursework, internships, and externships. Many law schools offer elective courses in tax law, providing students with in-depth knowledge of tax codes, regulations, and legal principles.
Upon graduating from law school, aspiring Tax Attorneys must pass the bar examination in the state where they intend to practice law. The bar examination tests candidates' knowledge of state-specific laws and legal procedures, including tax law principles applicable to their jurisdiction.
Following successful completion of the bar examination, aspiring Tax Attorneys typically gain practical experience through internships, clerkships, or entry-level positions at law firms, government agencies, or corporate legal departments. This hands-on experience allows them to apply legal principles in real-world settings and develop expertise in tax law.
In addition to passing the bar examination, Tax Attorneys may pursue licensure or certification in tax law through professional organizations such as the American Bar Association (ABA) Section of Taxation or the National Association of Tax Professionals (NATP). These credentials demonstrate a commitment to excellence and expertise in tax law practice.
Tax Attorneys possess specialized knowledge of tax laws and regulations, enabling them to provide authoritative guidance and representation to clients facing complex tax issues. They have the authority to represent clients in tax-related matters before administrative agencies, courts, and regulatory bodies, advocating for their interests and ensuring compliance with legal requirements.
Tax Attorneys can pursue careers in law firms, accounting firms, government agencies, corporate legal departments, and nonprofit organizations. Their unique skill set and legal expertise open doors to a wide range of professional endeavors.
The world of tax preparation and representation is rich and varied, offering numerous pathways for aspiring professionals to pursue their passion for finance and law. From unregistered tax preparers to seasoned Enrolled Agents, Certified Public Accountants, and Tax Attorneys, each category of tax practitioner brings its own unique qualifications, expertise, and opportunities for professional growth.
In a field as dynamic and multifaceted as tax preparation, there is no one-size-fits-all approach. Instead, aspiring professionals can chart their own course, leveraging their skills, interests, and ambitions to carve out a fulfilling and impactful career in tax preparation and representation. Whether you're just starting out or seeking to advance to new heights, the world of tax preparation offers boundless opportunities for growth, success, and professional fulfillment.