Understanding Tax Return Preparer Credentials...
Any tax professional with an IRS Preparer Tax Identification Number is authorized to prepare federal tax returns. Tax professionals, however, have differing levels of skills, education and expertise. There are several different types of return preparers with credentials.
An important difference in the types of practitioners is “representation rights”. Here is guidance on each credential:
UNLIMITED REPRESENTATION RIGHTS: Enrolled agents, certified public accountants, and attorneys have unlimited representation rights before the IRS and may represent their clients on any matters including audits, payment/collection issues, and appeals.
Enrolled Agents (EA)– People with these credentials are Licensed by the IRS. Enrolled agents are subject to a suitability check and must pass a three-part Special Enrollment Examination, which is a comprehensive three-part exam that requires them to demonstrate proficiency in federal tax planning, individual and business tax return preparation and representation. They complete 72 hours of continuing education every 3 years.
Certified Public Accountants – People with this credential are licensed by state boards of accountancy, the District of Columbia, and U.S. territories, and 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. In addition, CPAs must comply with ethical requirements and complete specified levels of continuing education in order to maintain an active CPA license.
Attorneys – People with this credential are licensed by state courts, the District of Columbia or their designees, such as the state bar. Generally, they have earned a degree in law and passed a bar exam. Attorneys generally have on-going continuing education and professional character standards.
LIMITED REPRESENTATION RIGHTS: Preparers without any of the above credentials have limited practice rights. They may only represent clients whose returns they prepared and signed, but only before revenue agents, customer service representatives, and similar IRS employees, including the Taxpayer Advocate Service. They cannot represent clients whose returns they did not prepare and they cannot represent clients regarding appeals or collection issues even if they did prepare the return in question.
An important difference in the types of practitioners is “representation rights”. Here is guidance on each credential:
UNLIMITED REPRESENTATION RIGHTS: Enrolled agents, certified public accountants, and attorneys have unlimited representation rights before the IRS and may represent their clients on any matters including audits, payment/collection issues, and appeals.
Enrolled Agents (EA)– People with these credentials are Licensed by the IRS. Enrolled agents are subject to a suitability check and must pass a three-part Special Enrollment Examination, which is a comprehensive three-part exam that requires them to demonstrate proficiency in federal tax planning, individual and business tax return preparation and representation. They complete 72 hours of continuing education every 3 years.
Certified Public Accountants – People with this credential are licensed by state boards of accountancy, the District of Columbia, and U.S. territories, and 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. In addition, CPAs must comply with ethical requirements and complete specified levels of continuing education in order to maintain an active CPA license.
Attorneys – People with this credential are licensed by state courts, the District of Columbia or their designees, such as the state bar. Generally, they have earned a degree in law and passed a bar exam. Attorneys generally have on-going continuing education and professional character standards.
LIMITED REPRESENTATION RIGHTS: Preparers without any of the above credentials have limited practice rights. They may only represent clients whose returns they prepared and signed, but only before revenue agents, customer service representatives, and similar IRS employees, including the Taxpayer Advocate Service. They cannot represent clients whose returns they did not prepare and they cannot represent clients regarding appeals or collection issues even if they did prepare the return in question.
