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Tax Preparers in California: Know the Difference!

As reported on Business Wire: :.--(BUSINESS WIRE)---"California is one of the few states that require paid tax preparers to be licensed or registered. Each professional has varying levels of skills and not all of them necessarily deal with preparing tax returns."

So which tax preparer is right for you?

*Attorney-*

Any attorney, not just a tax attorney, can prepare your tax return; however, most attorneys only handle legal issues regarding your taxes. An attorney has unlimited representation rights to assist clients in court or before the IRS. If you want an attorney to prepare taxes for you, ask them first about their experience with income tax preparation, what continuing education they take specifically for taxes and ask about availability for tax related questions outside of tax season, as well as related charges. If you feel you need an attorney for a tax related issue, determine if they are really what you need. Most audits, collections matters and even offers in compromise do not require skills unique to attorneys. Many CPAs and Most EA's also have these skills.

*Certified Public Accountant (CPA)-*

CPAs are required to pass a qualifying accounting exam, but that does not mean they're all experts on tax preparation. For the most part, CPAs can help you create an overall tax plan and guide you through complex financial situations. They are generally not required to take any tax specific continuing education as many CPA's never prepare taxes. If you are mostly interested in tax preparation help, ask about their experience with filing tax returns and what tax specific continuing education they have taken in the past year or two. CPAs also have unlimited representation rights before the IRS. If you are considering them for audit, collections or offer in compromise assistance, ask them about their history with these matters: how many have they handled like your situation, what is the usual outcome of their process, and how do they stay up on the current issues in these fields.

*CTEC Registered Tax Preparer (CRTP)-*

They must complete a qualifying education course on federal and state tax laws, pass a test from a CTEC-approved education provider, and then complete continuing education requirements each year. They are also required to obtain a $5,000 surety bond to protect clients against fraud. Because CTEC is a state-based program, CRTPs have limited representation rights. It means they can only represent clients before the IRS with tax returns they prepared and signed. To qualify for limited representation rights, they must obtain a record of completion from the IRS Annual Filing Season Program.

Persons registered with CTEC has taken recent continuing education to keep up their licenses. Ask them about the classes they took: what were the topics, was it new information to them this year or was it review of things they are already know. Ask them how they keep up on current tax laws. Many times, CRTP's are more current and knowledgeable on taxes, particularly state taxes, than other professionals because of the specific continuing education requirements they have for 20 annual hours of continuing education including at least 4 hours on California State tax law. Unfortunately, their limited representation does not allow them to work on advance audit matters such as appeals, collections or offer in compromise matters. If this is the assistance you need, you may need to find a CRTP that works with one of the other professionals who does have unlimited representation rights.

*Enrolled Agent (EA)-*

They are the only professional specifically regulated by the federal government, specifically the United States Department of the Treasur, Internal Revenue Service. To become an EA, one must be a former IRS employee who spent at least 5 years administering federal tax law or they are required to pass a comprehensive IRS exam on federal tax matters. EAs must also complete 72 hours every three years of continuing education courses on federal tax laws. Similar to attorneys and CPAs, they have unlimited representation rights before the IRS. EA's have the strictest requirements for staying up-to-date with current federal tax law. Many EA's have a broad and comprehensive understanding of all matters tax, including audit, collections and offer in compromise. Be sure to ask about what courses they have taken recently, what their experience is, and what outcomes have they experienced when representing clients before the IRS.

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Wednesday, 18 October 2017

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