IRS voluntary education program
For years, anyone who wanted to prepare taxes could simply hang out a shingle and start filling out tax returns for a fee. Such operations include accountants, mom and pop tax preparation firms and storefronts that pop up in January and close in April.
While a few states have regulated tax preparers, there was no federal oversight in place.
However, in recent years, the IRS has been offering a voluntary program designed to encourage tax return preparers to participate in continuing education courses. This effort, known as the Annual Filing Season Program, is open to any preparer but targets tax pros who do not get credentials through other groups or professional associations.
The voluntary program requires 18 hours of continuing education, including a six-hour federal tax law refresher course and test. The IRS also is still issuing each tax preparer a preparer tax identification number, or PTIN.
The program remains in place for the 2017 filing season. However, it's the taxpayer's responsibility to check out any tax professional, with or without outside credentials. Be sure to ask any potential tax preparer for references and assurances that the office will be open after your return is filed in case you or the IRS has follow-up questions.
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Chain tax franchises
Tax preparation chains are popular choices for many taxpayers. The employee-preparers at each franchise office receive some preseason tax training. They also use tax software to help guide them and their clients through returns.
These tax preparation outlets work well for individuals who have relatively simple returns, want quick turnaround (and typically early refunds) and don't want to pay as much as other tax professionals charge.
If, however, your tax situation is more complex -- for example, you own a business or you have several types of income -- you might want to find a tax preparer who specializes in your type of filing situation.
An enrolled agent, or EA, is licensed by the federal government and is authorized to appear in place of a taxpayer at any IRS meeting or hearing.
Many EAs are former IRS employees. Agents who did not work for Uncle Sam will have passed a comprehensive IRS exam.
EAs also must complete regular continuing education courses to maintain their status.
Many enrolled agents specialize in specific tax areas, so ask about an agent's area of expertise before you hire him or her.
You can find an EA by using the online search tool on the National Association of Enrolled Agents' website.
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Certified public accountant
A certified public accountant, or CPA, has passed a state's qualifying accounting exam but may not be an expert on tax matters.
A CPA can help you create an overall tax plan and guide you through complex financial situations. A CPA may be your best choice if you've recently been divorced, retired, opened or closed a business or had any other lifestyle changes that significantly affected your finances.
If, however, you are primarily interested in tax preparation help, ask the CPA about his or her tax-filing experience.
Like an enrolled agent, a CPA can represent you before the IRS. The American Institute of Certified Public Accountants' website offers guidance on finding a CPA.
A tax attorney doesn't necessarily specialize in filing tax returns. Rather, you will want a tax attorney's services when you encounter a legal issue regarding your taxes.
If you are being audited, owe back taxes or face criminal tax charges, you definitely want to hire a tax attorney. As your counsel, an attorney can represent you before the IRS as well as in court.
In less extreme situations, an attorney can help you create legal tax shelters or work through more complex tax concerns, such as corporate taxes.
Many tax attorneys specialize in certain tax areas, so be sure the one you choose is familiar with your particular needs.
Check with your local bar association chapter for information on tax attorneys in your area.
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