All Things Financial Planning Blog

Who’s Preparing Your Tax Return?


For many of you, your answer will be “I prepare my own return.” If your return is a simple one because all you have is a W-2 form for your wages and maybe you have some interest income and you are taking the standard deduction, then this may be the right move for you.

For the rest of you, the answer is you may need a paid preparer to provide you with the expertise to file a complete, accurate and correct tax return. If you have not used a paid preparer in recent years, you have missed a lot of what the Internal Revenue Service (IRS) has done to improve the procedures and controls over the paid preparer tax community.

Several years ago, the IRS put in place a PTIN program for preparers. PTIN stands for Preparer Tax Identification Number and was meant to replace using the Social Security Number of the tax preparer for security purposes. In 2011, the IRS began the next phase requiring anyone paid to prepare tax returns to have a PTIN and to sign the returns that they were paid to prepare. All paid preparers were also required to be licensed, pass a basic competency test and take continuing education classes. Today one of the following certifications or licenses is required to prepare, sign, and be paid for a tax return:

  1. Attorney
  2. Certified Public Accountant
  3. Enrolled Agent
  4. Registered Tax Return Preparer

Each of these groups has different requirements for maintaining their license to practice. They also have different requirements with respect to keeping abreast of the tax laws and ethics of preparing tax returns. So let’s look at each category of preparer.

  1. Attorneys. Individuals who are attorneys gain their right to be an attorney from each state. The rules are different in each state for maintaining their license. The IRS grants them the ability to prepare and sign tax returns by virtue of their state issued license, but they still need a PTIN to file tax returns. They have annual continuing education requirements designated by their state to keep their license. A lawyer may represent a tax client before the IRS for any tax matter for any year as well as represent that client before state tax authorities.
  2. Certified Public Accountants (CPA). A CPA receives and maintains their license under the rules of each state they are licensed to practice in. The state rules determine the amount and type of continuing education that each CPA must have each year. The IRS allows CPA’s to prepare and file tax returns by virtue of their CPA license but they still need a PTIN to file tax returns. A CPA may also represent a client before the IRS and state tax authorities for any tax matter for any year even if the CPA did not prepare the original return.
  3. Enrolled Agents (EA). A person who is an EA is federally licensed by the IRS and has unlimited practice rights to represent any clients before the IRS on any tax matter. This license is obtained by taking a comprehensive 3-part exam that requires a minimum passing score in the areas of individual tax, corporate tax, and regulation. Some people may obtain their EA license through their work experience with the IRS in certain job areas. Like the attorney and the CPA, the EA can represent the client on any tax matter for any year even if the EA did not prepare the original tax return. The IRS has established that an EA must have 72 hours of continuing education on tax matters every three years and a minimum of 16 hours in any one year. These hours must include 2 hours of ethics training per year. Failure to meet these education requirements will result in loss of the EA designation.
  4. Registered Tax Return Preparer (RTRP). In 2011 the IRS established a new designation of RTRP for individuals who want to be tax preparers but do not have the above noted licenses. This license is obtained by taking a basic competency test on individual taxation. The rules for 2012 and beyond require that all tax preparers (other than the above licensed preparers) must be an RTRP as the minimum designation to be a paid tax preparer and signer of any tax return they prepare. This RTRP license is limited in scope when it comes to representing clients since they can only represent you on a return that they prepared. They cannot represent you on prior year returns which they did not prepare and they cannot represent you on all collection activities that you might become subject to if your return is selected for audit. The IRS has established a minimum of 15 hours of continuing education per year for individuals with the RTRP license with 2 hours being ethics training.

Given the newness of the RTRP tax preparation license, it is important to understand the breadth and limits of the person who has the RTRP designation. When the new designation was established in 2011, anyone who wished to prepare tax returns could register to get the RTRP designation and the corresponding PTIN number. For that group, they had until the end of 2013 to take and pass a basic test of their knowledge of the preparation of a Form 1040 tax return. They were also required to have the 15 hours of continuing education in 2012 to keep the RTRP into 2013 and they had to re-register their PTIN number by December 31, 2012.

For individuals who want to have the RTRP designation in 2013 and were not previously registered as a RTRP, they have to first take and pass the RTRP exam for the Form 1040 tax return and, in 2013, have 15 hours of continuing education on current tax rules and ethics.

All categories of tax preparers are required to renew their PTIN each year, meet continuing education requirements, and sign each return certifying that the return is complete and accurate to the best of their knowledge. All preparers also are subject to the requirements of Treasury Circular 230 which sets forth the Regulations Governing Practice before the Internal Revenue Service, including penalties for non-compliance.

So as you contemplate who to use as your paid tax preparer for your 2012 tax return, use this information to have an informed discussion with the person or persons you are considering entrusting with this task. Be sure that this person is signing the return because they are attesting to the completeness and accuracy of the amounts you are reporting on your tax return. If the person who prepares your return does not sign the return or does not have one of the credentials noted above, you may be signing an incorrect return and be setting yourself up for penalties if your return is selected for audit. You may also have to engage an attorney, CPA or EA to assist you with resolving the issues the IRS wants to discuss with you. If a preparer is not willing to sign a return that they prepare, they are not likely to stand by you when the IRS comes knocking.


Francis St. Onge, CFP®
Total Financial Planning, LLC
Brighton, MI

Author: Francis St. Onge, CFP®

Francis St.Onge has been a CFP® since 1991 and an EA since 2003 providing financial planning and tax planning services to a broad range of middle and upper income clients in the Brighton, Michigan, and surrounding areas through Total Financial Planning, LLC. Prior to the year 2000, Frank was employed in the health care industry for over 30 years as a Chief Financial Officer, Corporate Director of Internal Audit, and Regional Compliance Officer for several large multi-health care facilities. Frank has a bachelor degree in Accounting from Northern Illinois University in DeKalb, Illinois, and is also a Certified Fraud Examiner. He has been active in his professional organizations over the years, including being President of the Eastern Michigan Chapter of the Health Care Financial Management Association, President of the Detroit Chapter of the Institute of Internal Auditors, and chairman of numerous committees. Currently, he is serving as President of the Michigan Chapter of the National Association of Enrolled Agents and was its Treasurer prior to that. He has published numerous articles and made presentations at many seminars related to the organizations he has been a member of over the years. He has been an Adjunct Professor at Oakland University and Oakland Community College.

7 thoughts on “Who’s Preparing Your Tax Return?

  1. Well on the whole, I might say that “I am preparing my own” 🙂

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  3. It really help me to be prepared .

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    • Thanks for your comment and sorry I did not see this comment earlier. You could join Linked-In and that web site has many groups that have common interests that may be applicable to what you want.

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