How to Hire A Tax Professional / Tax Preparer: Which One Should I Hire?

Hiring A Tax Professional: Which One Should I Hire

I get this question a lot. I need to get my taxes done but I am not sure who I should hire.

When people think of taxes many times they think of CPAs or Certified Public Accountants. While CPAs can be really masterful and taxes, tax strategy, and tax planning, all CPAs are not tax professionals.

When thinking about taxes, I refer to the Internal Revenue Service aka The IRS for their guidance and how they view tax professionals as the benchmark for the tax professional, since they are the leading tax authority in the United States.

Below I will list how the IRS describes Tax Return Preparer Credentials

“Any tax professional with an IRS Preparer Tax Identification Number (PTIN) is authorized to prepare federal tax returns. However, tax professionals have differing levels of skills, education and expertise.

An important difference in the types of practitioners is “representation rights.” Here is guidance on each credential and qualification:

Unlimited Representation Rights: Enrolled agents, certified public accountants, and attorneys have unlimited representation rights before the IRS. Tax professionals with these credentials may represent their clients on any matters including audits, payment/collection issues, and appeals.

Enrolled Agents – 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 exam that requires them to demonstrate proficiency in federal tax planning, individual and business tax return preparation, and representation. They must complete 72 hours of continuing education every 3 years. Learn more about the Enrolled Agent Program.

Certified Public Accountants – licensed by state boards of accountancy, the District of Columbia, and U.S. territories. Certified public accountants 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. CPAs may offer a range of services; some CPAs specialize in tax preparation and planning.

Attorneys – 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 ongoing continuing education and professional character standards. Attorneys may offer a range of services; some attorneys specialize in tax preparation and planning.
Limited Representation Rights: Some preparers without one 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. Tax return preparers with limited representation rights include:

Annual Filing Season Program Participants – This voluntary program recognizes the efforts of return preparers who are generally not attorneys, certified public accountants, or enrolled agents. It was designed to encourage education and filing season readiness. The IRS issues an Annual Filing Season Program Record of Completion to return preparers who obtain a certain number of continuing education hours in preparation for a specific tax year.

Beginning with returns filed after December 31, 2015, only Annual Filing Season Program participants have limited practice rights. Learn more about this program.

PTIN Holders – Tax return preparers who have an active preparer tax identification number, but no professional credentials and do not participate in the Annual Filing Season Program, are authorized to prepare tax returns. Beginning January 1, 2016, this is the only authority they have. They have no authority to represent clients before the IRS (except regarding returns they prepared and filed December 31, 2015, and prior).”
– Source IRS website

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