More than 78 million people who pay taxes utilize tax professionals’ services to prepare their tax returns. Generally, any tax professional with an IRS Preparer Tax Identification Number (PTIN) is authorized to prepare federal tax returns.
Most tax professionals provide top-notch services but have varying expertise, skills, and educational background. One significant difference that sets them apart is their “representation rights,” also known as practitioner rights. These rights include representing their clients before the Internal Revenue Service (IRS).
These rights fall into two categories: unlimited representation and limited representation. As the name says, absolute representation rights allow tax practitioners to represent their clients in any matter: audits, bookkeeping, related payment or collection issues, and appeals, to name a few.
On the other hand, limited representation rights only allow the professional to represent their clients whose returns are prepared and signed by them and only before revenue agents, customer service representatives, and IRS employees like the Taxpayer Advocate Service.
Comprehensive Guide to Credentials and Qualifications
Unlimited representation rights
Enrolled Agents (EAs), Certified Public Accountants (CPAs), and attorneys have unlimited representation rights before the IRS.
Certified public accountants
Certified Public Accountants (CPAs) complete the Uniform CPA Examination. Moreover, they have studied for a bachelor’s degree with at least 150 formal education hours and gained experience under a licensed CPA.
They must adhere to their board’s ethical and good character requirements and complete continuing professional education to maintain their professional competence and, most importantly, their CPA license.
For example, they may provide various services: audit, consultancy, forensic, and specialized tax planning and preparation.
Enrolled agents
The IRS licenses Enrolled Agents (EAs) must pass a three-part comprehensive enrollment exam, which tests their proficiency in federal tax planning, representation, and tax return preparation of individuals and businesses.
They are also subject to suitability checks and must complete 72 hours of continuing education every three years.
Attorneys
State courts license attorneys. They have completed a law degree and also passed a bar exam. They have ongoing continuing education and standards of professional character.
Though attorneys can offer a wide range of services, some specialize in tax planning and preparation.
Limited representation rights
Tax practitioners with limited representation rights include Annual Filing Season Program Participants and PTIN Holders.
Annual filing season program participants
Annual Filing Season Program Participants is a voluntary program that recognizes the individuals preparing tax returns, not CPAs, EAs, or attorneys. This program was designed to encourage education and prepare taxpayers for filing season.
The IRS issues the Annual Filing Season Program Record of Completion to return preparers who complete a specific number of continuing education hours in preparation for a given tax year.
PTIN holders
Preparers of tax returns with a Preparer Tax Identification Number (PTIN) but no professional credentials and non-participants of the Annual Filing Season Program are also allowed to prepare tax returns.
However, this is the only authority that PTIN holders have. They cannot represent clients before the IRS (this rule does not apply to returns they prepared and filed on or before December 31, 2015).
Directory of federal tax return professionals with credentials and select qualifications
The IRS has a searchable and sortable public directory that contains individual tax professionals to help taxpayers determine their tax preparer’s credentials and qualifications.
The database contains the tax practitioner’s name, state, city, and zip code with limited and unlimited representation rights.
Reminder
All practitioners mentioned above, and individuals must have an IRS-issued PTIN to be eligible to prepare their tax returns lawfully. Furthermore, the IRS suggests checking the history and qualifications of their tax preparers and setting the terms before starting an arrangement to ensure that no discrepancies occur in your filing process.
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