I recently attended an education conference hosted by the Internal Revenue Service. I suffered through hours of classes each day, but was rewarded with San Diego evenings and a sunset on an ocean beach.
Tax return preparers are required to have a PTIN, or preparer tax identification number. Other than that, there aren't really any requirements to be a paid tax return preparer. That's kind of scary!
Imagine asking your landscaper to repair wires in your breaker box, or your barber to replace your transmission. No thanks! While these people might all be experts in their fields, it is their experience and knowledge that make them good at their day jobs. The phrase "Knowledge is power" is true, even in the world of accounting and tax preparation.
Here is a quick review of the levels of continuing education requirements.
To be a paid tax return preparer, nothing more is required than obtaining a PTIN. There are no education requirements.
Participants in the IRS's Annual Season Filing Program must obtain 18 hours of education to be included in a public database of return preparers on the IRS website. No credentials are required; these preparers just have a desire to hold themselves to a higher standard than other uncredentialed preparers.
If someone has signed up with the IRS to be a Registered Tax Return Preparer they must first pass a test. Then they are able to participate in the Annual Season Filing Program, but they only need 15 hours of education to satisfy IRS requirements.
Enrolled Agents (EAs) must also pass an IRS test, and are required to obtain 72 hours of education in a three year period, with no fewer than 16 hours per year. That averages to 24 hours per year to meet the requirement.
While requirements may vary by state, Utah requires Certified Public Accountants (CPAs) to pass multiple tests to become licensed, and then obtain 80 hours of education in a two year period. That averages to 40 hours per year to meet the requirement!
As a side note, I should point out that these are only the *continuing education requirements. While almost all of these require passing some sort of test, a CPA must first obtain 150 university credit hours. Most professionals accomplish that when they receive a Masters degree in Accounting, Tax, or a related field.
So if you need the pipes in your house replaced, call a plumber. And if you need tax and accounting services, call a CPA.
Next Step Blog
Our blog is intended as a tool to keep people informed about relevant tax and accounting issues. If you have a question or an idea for a post, let us know!