How To Become A Tax Preparer: Part 1

While most of our visitors are already well versed in the prep of becoming a registered tax return preparer, we frequently field questions from those looking to enter the business. Many want to know how to become a tax preparer and what requirements must be filled to become registered.

 

What To Do First

For an individual to become a tax preparer they must register for an EFIN, obtain a PTIN, pass the IRS test establishing minimal competency and have an RTRP certificate from the IRS.

  1. Register For An Electronic Filing Identification Number (EFIN)

There are three easy steps to register for an EFIN:

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    • Create an IRS e-Service Account
    • Submit your application
    • Pass a suitability check. There is no fee and the process takes up to 45 days.
      EFINs are issued on a firm basis.

      All tax return preparers in a firm are covered by the one EFIN.
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      2. Obtain A PTIN
        A PTIN is a number issued by the Internal Revenue Service to paid preparers. The preparer uses the PTIN instead of disclosing their SSN on the returns they prepare. All paid preparers are now required to register and obtain a PTIN before they can prepare returns for compensation. This applies whether you sign the return or not. 

      Note: Before you begin your PTIN application, be sure you have all your personal information. If you obtained your PTIN before 9/28/10 and you did not renew it after that date, you must register using the new online system or Form-12. You may not be issued the same PTIN when you register.

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      2. Pass The IRS Test Establishing Minimal Competency
        The new IRS testing requirements have established a benchmark of minimum competency necessary for tax return preparers to obtain their professional credentials. The 120-question test has a perfect score of 500. Preparers must score 350 or higher to receive a passing grade. Learn more about the competency test and see a quick overview of the test.
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      2. Pass The Tax Compliance Check
        Once you pass the competency test you must pass a tax compliance check performed by the IRS. The tax compliance check is done to ensure all tax preparers have filed all necessary tax returns and are current with federal tax obligations. The IRS states the compliance test is, “generally completed within a couple of weeks after the test score is issued”. Those individuals passing both the minimal competency test and the tax compliance check will be sent a Registered Tax Return Preparer certificate.

      Note: Only those tax return preparers who have received a Registered Tax Return Preparer certificate may call themselves Registered Tax Return Preparers. 

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      2. Find Out What Your State Requirements Are
        Review the IRS state page for your state’s requirements. 
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      2. Evaluate Tax Software
        Tax software is the most important part of an efficiently run tax office. Remember, as a tax professional, you are responsible for the accuracy of the entire tax return. With the increasing complexity of the tax code, it is difficult to ensure complete accurateness without the help of tax preparation software. TaxSlayer Pro Software is an all-inclusive software that includes all states, free unlimited e-filing, tax refund bank products, comprehensive depreciation module, a tax library, corporate tax software and unlimited 1040 program. We invite you to take a look at a Demo of TaxSlayer Pro and let us know what you think.

       Tune in next week for part 2 of the
      How To Become A Tax Preparer Series: What To Expect
      .