Is your tax return preparer qualified to prepare an income tax return? Despite the number of levels of qualifications for preparers, it remains a relatively unregulated business. Suppose that I have never prepared a tax return in my life, but I decide it might be a good thing to do. I can go to the IRS website, complete an application which certifies that I do not have any felony convictions and am current in my obligations to the IRS, and pay the $64.25 fee. For my $64.25 I get a PTIN – Preparer Tax Identification Number that will allow me to prepare income tax returns for compensation.

Look for a PTIN

As the tax code gets more and more complex, people are turning to professionals to prepare their returns. What should you look for in a tax return preparer? There are actually three levels to look at. First, make certain that the preparer has a PTIN. This can be verified by asking to see the preparer’s letter from the IRS indicating that he or she has a valid PTIN. This process will actually get much simpler, and hopefully soon. The IRS is supposed to have an online database sometime in 2015 that will allow you to search for a tax preparer and determine if that person has a PTIN.

Look for Certifications

The second thing you should look for is professional qualifications. CPA’s and attorneys have the right to prepare tax returns. However, not all CPA’s and attorneys are experienced in preparing returns, so just because they hold one of these designations does not necessarily mean that they are well-qualified to prepare your return. CPA’s and attorneys have a minimum of a college degree, and frequently additional degrees. Both have passed a state examination in order to be licensed.

Another group of professional qualified preparers is the Enrolled Agent (EA). An EA is someone who has passed an examination and is licensed by the IRS to prepare returns. These professionals specialize in tax, and will tell you that the EA is the only certification available in tax matters.

One very important factor about CPA’s, attorneys, and EA’s is that they have unlimited representation rights before the IRS. If you have an issue with the IRS, these people are allowed to fully represent you in the IRS inquiry. In addition, all three of these groups are subject to continuing education requirements.

You may also see someone representing themselves as a Registered Tax Return Preparer (RTRP). This is the certification earned by certain individuals during the recently failed IRS attempt to require all tax return preparers to achieve some certification and continuing education. The IRS no longer recognizes this designation, but the designation represents that the person has passed an examination in individual taxation.

The latest certification attempt by the IRS is the Annual Filing Season Program (AFSP). Since the courts ruled the IRS can’t require preparers to become certified, this is a voluntary program. AFSP participants pass an examination and take a certain number of continuing education courses each year. These have limited representation rights before the IRS.

Finally, you have tax return preparers who hold no certification but have a PTIN. They are allowed to prepare returns but have no continuing education requirements. After 2015, PTIN holders with no certifications will have no representation rights before the IRS.

There are good and bad preparers in all of the above categories. So don’t accept or reject someone only on the basis of their credentials.

In addition, there are the “black market” preparers – individuals who do not hold any designations and will prepare your return for a fee, but will not sign it as paid preparer. Run, do not walk away from these. If there is an issue with your return, you cannot plead to the IRS it was the preparer’s mistake, as the return shows no evidence of a preparer. You are on you own here.

Look for Experience, Continuing Education, and Recommendations

Third, you should go beyond the PTIN and certifications and see if the preparer is a good match for your needs. What type of experience does the preparer have? There are many areas of tax. If you have some special issues in regard to your tax, find someone who is familiar with these issues. Ask about continuing education. What have they done in order to stay current? Ask for recommendations from friends and business associates. Who do they recommend, and why? Have questions ready for the preparer.

• What is your experience?
• Do you have a specialty?
• Have you done returns that included _____?
• How do you bill clients?
• What is your professional style? Aggressive? Conservative?
• Will you represent me if the IRS audits me?
• What do you need from me?

Taxes are complex and don’t be put off if a preparer tells you he or she doesn’t know the answer. None of us know and understand the full tax code. It was once said of Wilbur Mills, Congressman from Arkansas, that he understood the tax code better than anyone. If you remember, Congressman Mills kind of went off the deep end late in his career. I’m not saying his knowledge of the tax code had anything to do with it, but… I’m not taking any chances. The good preparers have the ability and resources to find the answers.

Finally, I would point out that no preparer is the best choice for everyone. Find someone you are comfortable with, whose experience meets your needs, and who will deal with you in a forthright manner.