Where To Go If You Need Tax HelpPublished:
Know Your Options for Tax Preparation Assistance
Are you looking for an expert to help you with your income tax return?
When it comes to choosing a qualified tax preparer, it is important to know that there are different types of credentials for different levels of tax training and expertise. You should do your best to select the right type of assistance to match your tax needs.
Options for Free Tax Help
The lowest level of expertise is Volunteer Training Certification, which is a credential provided by the Internal Revenue Service (IRS). An unpaid, volunteer preparer must undergo training in Standards of Conduct and pass a certification test (either at the Basic, Advanced, Military, or International level). Volunteers are only permitted to prepare taxes and perform quality reviews of tax returns for the level at which they have been certified.
There are 2 main programs offered to eligible persons who seek free tax assistance: Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE). VITA is available through local community organizations working in conjunction with the IRS. TCE provides tax help to qualifying elderly taxpayers through organizations such as AARP.
Types of Fee-Based Tax Preparers
It is mandatory for every paid tax preparer to obtain a PTIN (Preparer Tax Identification Number) and register annually with the IRS. Paid preparers are also required to sign every tax return they help prepare, and they must provide a copy of the prepared return to their client.
There are 4 main types of professional paid tax preparers:
Registered Tax Return Preparers (RTRPs)
A registered tax return preparer (RTRP) must pass the IRS’ competency examination, tax compliance check, and suitability check. Note that the competency exam covers individual tax returns (Form 1040 and its related schedules), but it does not cover business returns. RTRPs are considered to be “un-enrolled preparers” and have limited practice rights. In an audit, for example, they can only represent clients whose returns they have actually prepared and signed. Additionally, RTRPs are only permitted to represent their clients before certain types of IRS employees — including revenue agents, customer service representatives, and the Taxpayer Advocate Service (TAS). RTRPs are required to complete 15 hours of continuing education on an annual basis to retain their status.
Enrolled Agents (EAs)
An enrolled agent (EA) is someone licensed by the IRS who’s specifically trained in Federal tax matters and has been granted unlimited practice rights. In general, there are no restrictions on which taxpayers EAs can represent, which IRS offices they can represent clients before, or what types of tax matters they can work on. EAs must pass a comprehensive 3-part “Special Enrollment Examination” that covers individual and business tax returns as well as representation, practice and procedures. Enrolled agents must also complete 72 hours of continuing education every 3 years (at least 16 hours per year). In some cases, a person may be granted EA status if they have had substantial experience as a former IRS employee.
Certified Public Accountants (CPAs)
In order to become a Certified Public Accountant (CPA), a person must pass the Uniform CPA Examination and be licensed by the state boards of accountancy, the District of Columbia, and U.S. territories. CPAs have specialized training and they are expected to meet certain board requirements regarding education, experience, and ethical standards. To maintain an active CPA license, these individuals must also accomplish specific levels of continuing education (considerably more than an enrolled agent). CPAs can provide a variety of services — though some CPAs focus solely on tax planning and preparation, and can assist with both Federal and State tax issues. Like enrolled agents (EAs), CPAs are granted unlimited representation rights, which means they can represent clients on any tax matters (including tax audits, payment and collection issues, and appeals).
An attorney is someone who has been licensed by a state court or its designee (for instance, the state bar). Usually, in order to become an attorney, a person must obtain a law degree, pass a bar exam, meet certain professional character requirements, and engage in ongoing continuing education. Attorneys can provide a variety of services — a number of attorneys focus mainly on tax planning and preparation, as well as representation in criminal tax cases. Some attorneys are also CPAs, or they may hold an advanced legal degree (LLM) in taxation. Attorneys have unlimited representation rights, similar to EAs and CPAs.
In seeking a qualified tax return preparer, you can ask whether he or she belongs to any professional organizations. While enrolled agents, CPAs, and attorneys all have unrestricted representation rights before the IRS, their training and credentials are markedly different.
A reputable tax preparer will request your financial records for proof of income and ask pertinent questions to determine your eligibility for certain tax credits and tax deductions. Make sure you understand the nature of the preparer’s service fees — they should not be based upon a percentage of your tax refund. You will also want to review your tax return before it’s filed, because ultimately you are responsible for its accuracy and truthfulness.
If you have any concerns, you can always check the status of the tax preparer’s license: enrolled agents are registered with the IRS Office of Enrollment, CPAs are registered with their state board of accountancy, and attorneys are registered with their state bar association (or other regulatory body). In a worst-case scenario, you can report a tax preparer for suspected fraud by filing Form 14157 (Complaint: Tax Return Preparer), preferably with the assistance of legal counsel.
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