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When you decide to hire a tax preparer, whether for convenience or necessity, there are several types of tax preparers to choose from. Registered tax preparers, certified public accountants, enrolled agents and tax attorneys all have varying degrees of specialized expertise. Preparers who are unqualified for your particular need and circumstances can make costly mistakes —in 2005, the Franchise Tax Board estimated there were approximately 10,000 to 20,000 California tax preparers operating illegally.
The Business and Professions Code Sections 22250-22250 governs California Registered Tax Preparers. CRTPs must complete the legally required technical education, maintain a $5,000 tax preparer bond, and register with the California Tax Education Council (CTEC). Many CRTPs work for nationwide tax preparation firms. CRTPs generally have the least amount of training and formal education of the tax preparers. The Council's website links to consumer tips and to the Code of Conduct. The CTEC home page provides an online database to Verify a Tax Preparer.
If your tax return is complicated -- for example, you own or have just started a business, or you are going through a complicated divorce -- you may want to see a CPA. Certified Public Accountants must meet California's higher educational requirements and also pass the Uniform CPA Examination. They are certified, licensed and regulated through California Board of Accountancy (CBA) to handle a broad range of accounting issues. Some accountants concentrate on tax matters.The Board's website has a For the Consumer section which includes links to all the laws, rules, regulations and codes of professional conduct governing California accountants. There is also an online License Lookup feature.
The federal government regulates Enrolled Agents. These practitioners earn their EA license by passing a comprehensive examination, or by having worked for the IRS for five years in a position that regularly interprets and applies the tax code and its regulations. For more information and links to the laws and regulations that govern their practice see the website of NAEA, their national organization. The California chapter website includes a database for finding an EA near you, but because membership is voluntary this may not be complete.
California lawyers must comply with a host of laws, rules and regulations. They can become State Bar-certified tax specialists (and advertise themselves as such) by showing that they have extensive experience and tested ability in their field of law. View the requirements for their certification at the State Bar's website. At the website you can also search for certified specialists in this and other legal areas. You might consider using a tax attorney if you have significant assets, a lot of complicated investments, or both.
Who you choose to prepare your taxes will be based largely on the complexity of your return and your willingness to spend money for assistance. Another factor to consider when you hire a tax preparer is that CPAs, Enrolled Agents, and attorneys can appear in place of you in front of the IRS in all matters concerning audits, collection actions and appeals. Other types of preparers can only accompany you to audits of returns they have signed as preparers.
More detailed tips and advice for finding the tax preparer best suited to your needs and for verifying his or her authenticity can be found at both the CTEC and the IRS websites.
Should problems arise between you and your tax preparer that the two of you cannot resolve, there are a couple of avenues for complaint. As a consumer you can register complaints about any type of business through the Department of Consumer Affairs. And because the professions outlined here are governed by specific laws, regulations, and codes of conduct, there are standardized complaint procedures in place for each type of tax practitioner through the agency or board that oversees their profession. CTEC, the Board of Accountancy, the IRS and the State Bar all have online links to complaint procedures.
In addition, you can report suspected tax fraud and abusive return preparers to the IRS by completing Form 14157 and/or Form 14157-A and mailing it or a letter with similar information to the Internal Revenue Service address listed on the form.
By Mareth Wilson, Public Services Librarian
updated KB 4/13
Links for "Choosing a Tax Preparer"
California Business and Professions Code http://www.leginfo.ca.gov/calaw.html
California Tax Education Council (CTEC): http://www.ctec.org/
California Board of Accountancy (CBA): http://www.dca.ca.gov/cba/
National Association of Enrolled Agents (NAEA): http://www.naea.org/
California Society of Enrolled Agents (CSEA): http://www.csea.org/
California State Bar ethics laws, rules, and regulations: http://rules.calbar.ca.gov/
California State Bar Standards for Certification and Recertification in Taxation Law http://ls.calbar.ca.gov/Certification.aspx
California Department of Consumer Affairscomplaint forms and information http://www.dca.ca.gov/consumer/complaints.shtml
Internal Revenue Service (IRS): Tips for Choosing a Tax Preparer
IRS: How do You Report Suspected Tax Fraud Activity? http://www.irs.gov/individuals/article/0,,id=106778,00.html