More than 78 million taxpayers paid someone to prepare their federal tax return in 2016. Generally, anyone who prepares or assists in preparing a federal tax return for compensation must have a Preparer Tax Identification Number (PTIN). They must sign in the paid preparer's area of the return and give the taxpayer a copy of the return. Since 2012, anyone who prepares and files 11 or more Forms 1040, 1040A, 1040EZ or 1041 during a calendar year must use e-file. Most tax return preparers provide outstanding service, but they have differing levels of skills, education and expertise. Another important difference is their ability to represent taxpayers before the Internal Revenue Service. Representation rights, also known as practice rights, fall into two categories: Unlimited and LimitedRepresentation. Return preparers with unlimited representation rights can represent their clients on any matters including audits, payment/collection issues, and appeals. Those with limited representation rights can 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. Credentialed Return Preparers Tax return preparers with unlimited representation rights include professionals with the following credentials:
Annual Filing Season Program The IRS recognizes the efforts of non-credentialed return preparers who aspire to a higher level of professionalism. To that end, the IRS issues an Annual Filing Season Program Record of Completion to return preparers who obtain 18 hours of continuing education for a specific tax year that includes a six-hour federal tax law refresher course with a test. Return preparers who participate in the Annual Filing Season Program have limited representation rights and may 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 must participate in the Annual Filing Season Program in both the year of return preparation and the year of representation. They cannot represent clients whose returns they did not prepare. They cannot represent clients regarding appeals or collection issues even if they did prepare the return in question. Non-credentialed return preparers who do not participate in the Annual Filing Season Program may prepare and file federal tax returns, but cannot represent clients before the IRS. Researching Tax Return Preparers The IRS has a searchable, sortable public directory on IRS.gov to research tax return preparers. This directory contains only those with a valid PTIN who hold a professional credential or have obtained an Annual Filing Season Program Record of Completion from the IRS. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications contains the name, city, state and zip code of credentialed preparers and Annual Filing Season Program participants. Taxpayers can also research the type of credentials or qualifications held by a specific tax professional. The listings do not serve as an endorsement by the IRS. Tax Professionals with Specialized Credentials In addition to attorneys, CPAs and enrolled agents, the IRS recognizes the credentials of two other types of specialized tax professionals who are included in the Directory of Federal Tax Return Preparers. They include:
The IRS suggests taxpayers always check their tax return preparer’s qualifications and history. Ask about Service Fees before providing records and receipts needed to allow the preparer to determine taxable income, deductions and credits. Do not use a preparer who will e-file a return using only a pay stub instead of a Form W-2. Taxpayers should review the return and ask questions before signing because they are responsible for the information on the tax return, no matter who prepared it. Make a Complaint about a Tax Return Preparer Most paid tax return preparers are professional, honest and trustworthy and the IRS is committed to investigating those who act improperly. Taxpayers can Make a Complaint About a Tax Return Preparer for misconduct, such as:
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