Requiring the Licensing of Paid Tax Preparers: How Could Congress’s Upcoming Decision Affect You?

Currently paid tax preparers are not required to be licensed. Uncle Jo who was good at math in school can prepare all his nieces and nephews taxes without recourse. Along with Uncle Jo there are fraudulent “tax preparers” who promise higher returns by committing tax fraud; they then skip town and leave their clients to deal with IRS audits. Also in the mix are hard-working, legitimate tax preparers who supplement their income or run a small business preparing tax returns. All these individuals may soon be required to get a license as evidence of their ability to prepare taxes. How might upcoming legislation affect you?

Licensing fees.
A licensing fee could run several hundred dollars. Some worry this significant cost could put legitimate tax preparers out of business. This could also make it difficult for low-income people to afford the services of licensed tax preparers. But before you loose too much sleep, consider that the NATP (National Association of Tax Professionals) is on your side. In September of 2005, the NATP submitted a document to Congress entitled “Recommendations for Legislation to Register Paid Income Tax Preparers” where they suggest that, “the already existing Preparer Tax Identification Number system, also called PTIN, is one possible way to contain costs associated with a registration/licensing process. The structure is already in place, and it would be an economical way for the IRS to implement a registration/licensing process.” Hopefully, this suggestion would limit excessive licensing fees.

Testing and continuing education.
Currently tax preparers are not required to pass any exam or receive continuing education. If Congress passes legislation requiring the licensing of all paid tax preparers, those individuals would be subject to required testing and education. The question now is, how often should tax preparers be tested and provide proof of their continuing education?

NATP suggests requiring a competency evaluation that can assess a tax preparer’s proficiency, although they don’t specify how often tax preparers should be tested. The NATP also cautions against requiring tax preparers to be knowledgeable in all aspects of tax law, especially considering that over 90% of returns filed are for individuals. Strict educational requirements would increase costs to tax payers and discourage individuals from going to tax professionals to file their taxes.

Standard credentials.
Once licensed, you would receive credentials as proof of your ability to prepare taxes legally. While it may require some work for you to receive these credentials, it will put many clients at ease and attract more clients interested in finding a tax preparer with documented expertise and training.

Universal Accounting Center Will Keep You Informed
Through our Universal Tax Tips Newsletter, we hope to keep you informed of all current tax news. And as always we will work hard to help you receive the education and certification required to help you succeed as a tax preparer.

UAC’s Professional Tax Preparer Designation

Universal Accounting is the only organization authorized to award Professional Tax Preparer certification. This is an exclusive designation which shows that you are proficient in personal and small-business Tax Preparation.

When you begin your new business, you need to create confidence in your potential clients. The PTP certification gives your clients the confidence that you have mastered hands-on Tax Preparation with emphasis on small business tax returns.

To learn more, order our video “Introduction to the Professional Tax Preparer Certification.” For less than ten dollars you could be on your way to a more lucrative business. Order now!

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