SACRAMENTO, Calif., Jan. 25, 2019 /PRNewswire/ -- California is one of the few states that require paid tax preparers to be licensed or registered. State law requires anyone who prepares tax returns for a fee to be either an attorney, certified public accountant (CPA), CTEC-registered tax preparer (CRTP) or enrolled agent (EA) with the Internal Revenue Service. Each professional has varying levels of skills and not all of them necessarily deal with preparing tax returns.
Finding the right tax preparer really depends on your financial situation and needs.
Attorney- Any attorney, not just a tax attorney, can prepare your tax return; however, most attorneys only handle legal issues regarding your taxes. Attorneys have unlimited representation rights to assist clients in court or before the IRS.
Certified Public Accountant (CPA)- CPAs are required to pass a qualifying accounting exam, but that does not mean they're all experts on tax preparation. For the most part, CPAs can help create an overall tax plan and guide you through complex financial situations. If you are mostly interested in tax preparation help, ask about their experience with filing tax returns. CPAs also have unlimited representation rights before the IRS.
CTEC Registered Tax Preparer (CRTP)- CRTPs must complete a qualifying education course on federal and state tax laws, pass a test from a CTEC-approved education provider, plus complete continuing education requirements each year. They are also required to obtain a $5,000 surety bond to protect clients against fraud. Because CTEC is a state-based program, CRTPs have limited representation rights. It means they can only represent clients before the IRS with tax returns they prepared and signed. To qualify for limited representation rights, they must obtain a record of completion from the IRS Annual Filing Season Program.
Enrolled Agent (EA)- They are regulated by the federal government. In fact, some are former IRS employees. Those who did not work for the IRS are required to pass a comprehensive IRS exam. EAs must also complete continuing education courses on federal tax laws. Similar to attorneys and CPAs, they have unlimited representation rights before the IRS.
The IRS requires all paid tax preparers to obtain an individual Preparer Tax Identification Number (PTIN) and include it on all federal tax returns they prepare for clients.
CTEC is a nonprofit organization that was established in 1997 by the California State Legislature to protect taxpayers against fraud. Visit ctec.org for more information.
SOURCE California Tax Education Council