Tag Archives: Enrolled Agent

Press Release

Contact: John Michaels

(202) 822-0728

jmichaels@naea.org

 For Immediate Release

Alabaster Tax Practitioners Attends National Tax Practice Institute™

Washington, D.C. – 8/3/17 — In order to stay up-to-date on the latest changes in tax regulations, Cris Nelson, EA, and Kenyatta Ector, EA. attended the three-day National Tax Practice Institute® in Las Vegas, July 31 – August 3, 2017, further developing and fortifying their skills representing taxpayers before the IRS.

The course, open only to licensed tax professionals, was developed to prepare licensed representatives to protect their clients’ rights by disseminating the most recent information about IRS laws and procedures critical to representation.

At its core, NTPI is a three-level program developed to hone the skills of enrolled practitioners at all stages of their careers. With each level of this program, students expand their knowledge and skills, and gain the additional expertise needed to successfully guide their clients through the often challenging maze of IRS codes, internal regulations, and agency structure.

Enrolled agents (EAs) are a diverse group of independent, federally-authorized tax practitioners who have demonstrated a high level of technical competence in tax law and are licensed to practice by the United States government. EAs advise and represent taxpayers before the IRS, including taxpayers who are being examined, are unable to pay or are trying to avoid or recover penalties. EAs also prepare tax returns for individuals, partnerships, corporations, estates, trusts and any other entities with tax-reporting requirements. Unlike tax attorneys and CPAs, who may or may not choose to specialize in taxation, all EAs specialize in taxation and are required by the federal government to maintain their professional skills with continuing professional education. They are the only federally-authorized tax practitioners with unlimited rights of representation before IRS. That’s why they’re known as “America’s Tax Experts!”

Cris Nelson. EA and Kenyatta Ector, EA are members of the National Association of Enrolled Agents (NAEA) and the Alabama Society of Enrolled Agents.

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 About the National Association of Enrolled Agents

The National Association of Enrolled Agents (NAEA) has been powering enrolled agents, America’s tax experts®, for more than 45 years. NAEA is a non-profit membership organization composed of tax specialists licensed by the U.S. Treasury Department. NAEA provides the networking, educational opportunities, programs and services that enable enrolled agents and other tax professionals to excel beyond their peers. Enrolled agents are the only federally-licensed tax practitioners who both specialize in taxation and have unlimited rights to represent taxpayers before the Internal Revenue Service. To find out more, visit www.naea.org and follow NAEA on Facebook and Twitter.

The “Protecting Americans from Tax Hikes Act of 2015”

Overview of the Provisions

PERMANENT PROVISIONS

The bill makes over 20 tax relief provisions permanent, including provisions from 11 different bills marked up by the Ways and Means Committee in 2015.

  • Research and Development Credit (base credit, 14% ASC, AMT and Payroll provisions)
  • Section 179 expensing ($500,000 and $2 million limits, no limitation on real estate)
  • State and local sales tax deduction
  • 15-year depreciation for leaseholds and improvements
  • International tax relief: Active finance exception
  • Deduction for teacher classroom expenses
  • 100% exclusion on gains from sale of small business stock
  • Low-Income Housing Tax Credit extenders: the 9% floor and military housing allowance
  • Employer wage credit for employees on active duty (expanded for all employers)
  • All three charitable extenders: food inventory, conservation easements, and IRA charitable rollover, and exemption for certain payments to a controlling exempt organization
  • Both S corporation provisions: 5-year built in gains tax and charitable contributions
  • Mass transit parity
  • Deduction for teacher classroom expenses (indexed for inflation)
  • Enhancements since 2001: Earned Income Tax Credit, Additional Child Tax Credit, and American Opportunity Tax Credit
  • Two provisions for mutual funds: treatment of RIC dividends for foreign investors and subjecting RICs to FIRPTA

FIVE-YEAR PROVISIONS

  • Bonus depreciation (50% for 2015-17, 40% in 2018, 30% in 2019)
  • International tax relief: Controlled foreign corporation look-through rule
  • The New Markets Tax Credit
  • The Work Opportunity Tax Credit

TWO-YEAR PROVISIONS

  • Exclusion of discharged mortgage debt relief from gross income (modified)
  • Mortgage insurance premiums treated as qualified residence interest
  • Above the line deduction for qualified tuition and related expenses
  • Indian Employment Tax Credit
  • Railroad Track Maintenance Credit (modified)
  • Mine Rescue Team Training Credit
  • Qualified Zone Academy Bonds
  • Race horses: 3-year recovery period
  • Motorsports complexes; 7-year recovery period
  • Accelerated depreciation for business property on Indian reservations (modified)
  • Election to expense mine safety equipment
  • Film and television expensing (modified to include live theater)
  • Section 199 deduction for activities in Puerto Rico
  • Empowerment Zone tax incentives (modified)
  • Temporary increase in rum cover over
  • American Samoa economic development credit
  • Nonbusiness energy property credit
  • Alternative fuel vehicle refueling property credit
  • 2-wheeled plug-in electric motor credit
  • Second generation biofuel producer credit
  • Biodiesel and renewable diesel incentives credit
  • Indian Coal Production Tax Credit (modified)
  • Credit for facilities producing energy from certain renewable resources
  • Credit for energy-efficient new homes
  • Special allowance for second generation biofuel plant property
  • Energy efficient commercial buildings deduction
  • Special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities
  • Credits relating to alternative fuels
  • Credit for new qualified fuel cell motor vehicles
  • Medical device tax moratorium

EXCISE TAXES

  • Medical device tax moratorium
  • Craft Beverage Modernization and Tax Reform Act

PROGRAM INTEGRITY

  • Modification of filing dates of returns and statements relating to employee wage information and nonemployee compensation to improve compliance
  • Safe harbor for de minimis errors on information returns and payee statements
  • Requirements for the issuance of ITINs.
  • Prevention of retroactive claims of earned income credit after issuance of social security number.
  • Prevention of retroactive claims of child tax credit. Sec. 206. Prevention of retroactive claims of American opportunity tax credit
  • Procedures to reduce improper claims. Sec. 208. Restrictions on taxpayers who improperly claimed credits in prior year
  • Treatment of credits for purposes of certain penalties.
  • Increase the penalty applicable to paid tax preparers who engage in willful or reckless conduct.
  • Employer identification number required for American opportunity tax credit.
  • Higher education information reporting only to include qualified tuition and related expenses actually paid.

MISCELLANEOUS PROVISIONS

Family Tax Relief

  • Exclusion for amounts received under the Work Colleges Program
  • Improvements to section 529 accounts
  • Elimination of residency requirement for qualified ABLE programs
  • Exclusion for wrongfully incarcerated individuals.
  • Clarification of special rule for certain governmental plans
  • Rollovers permitted from other retirement plans into simple retirement accounts
  • Technical amendment relating to rollover of certain airline payment amounts
  • Treatment of early retirement distributions for nuclear materials couriers, United States Capitol Police, Supreme Court Police, and diplomatic security special agents
  • Prevention of extension of tax collection period for members of the Armed Forces who are hospitalized as a result of combat zone injuries

Real Estate Investment Trusts

  • Restriction on tax-free spinoffs involving REITs
  • Reduction in percentage limitation on assets of REIT which may be taxable REIT subsidiaries
  • Prohibited transaction safe harbors
  • Repeal of preferential dividend rule for publicly offered REITs
  • Authority for alternative remedies to address certain REIT distribution failures Limitations on designation of dividends by REITs
  • Debt instruments of publicly offered REITs and mortgages treated as real estate assets
  • Asset and income test clarification regarding ancillary personal property
  • Hedging provisions.
  • Modification of REIT earnings and profits calculation to avoid duplicate taxation
  • Treatment of certain services provided by taxable REIT subsidiaries
  • Exception from FIRPTA for certain stock of REITs
  • Exception for interests held by foreign retirement or pension funds
  • Increase in rate of withholding of tax on dispositions of United States real property interests
  • Interests in RICs and REITs not excluded from definition of United States real property interests
  • Dividends derived from RICs and REITs ineligible for deduction for United States source portion of dividends from certain foreign corporations

Additional Provisions

  • Deductibility of charitable contributions to agricultural research organizations
  • Removal of bond requirements and extending filing periods for certain taxpayers with limited excise tax liability
  • Modifications to alternative tax for certain small insurance companies
  • Treatment of timber gains
  • Modification of definition of hard cider
  • Church plan clarification

Revenue Provisions

  • Updated ASHRAE standards for energy efficient commercial buildings deduction
  • Excise tax credit equivalency for liquified petroleum gas and liquified natural gas
  • Exclusion from gross income of certain clean coal power grants to non-corporate taxpayers
  • Clarification of valuation rule for early termination of certain charitable remainder unitrusts
  • Prevention of transfer of certain losses from tax indifferent parties
  • Treatment of certain persons as employers with respect to motion picture projects

TAX ADMINISTRATION

Internal Revenue Service Reforms

  • Duty to ensure that IRS employees are familiar with and act in ac- cord with certain taxpayer rights
  • IRS employees prohibited from using personal email accounts for official business
  • Release of information regarding the status of certain investigations
  • Administrative appeal relating to adverse determinations of tax-exempt status of certain organizations
  • Organizations required to notify Secretary of intent to operate under 501(c)(4)
  • Declaratory judgments for 501(c)(4) and other exempt organizations
  • Termination of employment of Internal Revenue Service employees for taking official actions for political purposes
  • Gift tax not to apply to contributions to certain exempt organizations
  • Extend Internal Revenue Service authority to require truncated Social Security numbers on Form W-2
  • Clarification of enrolled agent credentials
  • Partnership audit rules

United States Tax Court

  • Filing period for interest abatement cases
  • Small tax case election for interest abatement cases
  • Venue for appeal of spousal relief and collection cases
  • Suspension of running of period for filing petition of spousal relief and collection cases
  • Application of Federal rules of evidence
  • Judicial conduct and disability procedures
  • Administration, judicial conference, and fees
  • Clarification relating to United States Tax Court

Fighting Tax Scam Phone Fraud

WASHINGTON, DC (October 21, 2015) The Internal Revenue Service has a warning for many Americans (and it’s not about paying your taxes). Instead, the agency has tips on how to protect yourself from telephone scam artists calling and pretending to be with the IRS. These callers may demand money or say you have a refund due and try to trick you into sharing private information. The con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request. “We urge people not to be deceived by these threatening phone calls,” said IRS Commissioner John Koskinen. “We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry shakedown calls are not how we do business.”

What to Watch For The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not: • Call to demand immediate payment or call about taxes owed without first having mailed you a bill. • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe. • Require you to use a specific payment method for your taxes, such as a prepaid debit card. • Ask for credit or debit card numbers over the phone. • Threaten to bring in the police or other law-enforcement groups to have you arrested for not paying.

What to Do If you get a phone call from someone claiming to be from the IRS and asking for money, here are things you can do: 1. If you know you owe taxes or think you might, call the IRS at (800) 829-1040. 2. If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at (800) 366-4484 or at www.tigta.gov. You can also file a complaint with the Federal Trade Commission’s “FTC Complaint Assistant” at FTC.gov. Add “IRS Telephone Scam” to the comments of your complaint. 3. Get help from a licensed tax professional. Enrolled agents (EAs) are America’s tax experts. They are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. If you are audited by the IRS, an EA can advocate on your behalf.

Six Common Myths Regarding Income Tax

By:  Isaac M O’Bannon, Managing Editor CPA Practice Advisor

While millions of American taxpayers wait for their W-2, 1099 and other important tax documents to arrive in the mail, their thoughts turn to the often-dreaded prospect of filing their 2014 tax returns.

With all the annual changes to the tax rules and its complexity, it’s not surprising that millions of Americans hire a paid preparer. After all, asking questions or searching the Web for answers often leads to more confusion and misconceptions, because when it comes to taxes, one standard answer usually does not fit all.

The National Association of Enrolled Agents, an organization of federally licensed tax professionals, has pointed out six frequently-encountered tax myths.

Myth 1: “I’m filing an extension this year, so I don’t need to pay anything yet.”

Fact: Tax extensions only extend the time you have left to file, and do not change the date on which you have to pay taxes owed. If you owe taxes and file an extension, you still have to pay the taxes owed by April 15, regardless of the extended deadline date. Otherwise, interest and penalties begin to stack up.

Myth 2: “I had a really big loss in the stock market this year, so I won’t owe any income taxes.”

Fact: Deduction of capital losses against ordinary income is limited to $3,000 per year. Also, whether you reinvest or receive dividends, they are income and are taxed as such.

Myth 3: “They paid me in cash, so I don’t have to report it.”

Fact: If it’s income, you must report it. You must always report income, regardless of whether it’s cash, tips, bonuses or dividends.

Myth 4: “I’m too young to have to pay taxes.”

Fact: Even dependents working part-time while in high school must file a tax return if they earned more than $6,200 in 2014, if they want to receive their refund or if their unearned income is more than $1,000.  There are numerous other situations that may lead to a dependent having to file a tax return. To be safe, consider consulting a licensed tax professional.

Myth 5: “Income earned outside the U.S. is not taxable.”

Fact: The operative word is “income,” which means it’s taxable. The IRS requires taxpayers to report all earned income, even if it’s earned abroad.

Myth 6: “Tax preparers only fill out forms that you can do yourself.”

Fact: Licensed preparers know the intricate (and constantly changing) tax laws, regulations and codes, and how they can be applied for your benefit to save you money. Enrolled agents receive IRS-approved annual continuing education, ensuring that they have the most up-to-date strategies to make sure you pay only what you owe and get any refunds you are due. Enrolled agents, CPAs and tax attorneys are also the only tax professionals who can represent taxpayers before the IRS.

Expired Tax Breaks Renewed

At long last, Congress granted a reprieve for most of the expired tax provisions that had remained in limbo this year, but the late-breaking tax relief is only temporary.

The new legislation – the Tax Increase Prevention Act of 2014 – restores these tax breaks retroactive to January 1, 2014. However the provisions expire again on December 31, 2014, so Congress will likely take up these measures again after the holidays. The president is expected to sign the approved bill into law.

The tax extenders cover a wide range of tax breaks both large and small for individuals and businesses. Here are ten of the most popular items for your clients.

1.State and local tax deductions: In lieu of deducting state and local income taxes, a taxpayer may elect to deduct states sales taxes. Deductions are based on actual receipts or a state-by-state table (plus sales tax paid for certain big-ticket items).

2.Section 179 deductions: A business can currently deduct, or “expense,” up to $500,000 of qualified assets placed in service in 2014, subject to a phaseout threshold of $2 million. Prior to the latest extension, the maximum allowance was just $25,000 with a $200,000 phaseout threshold.

3.Bonus depreciation: A separate provision allows a business to claim 50% “bonus depreciation” for qualified assets placed in service in 2014. Note that bonus depreciation may be combined with the Section 179 deduction in some cases.

4.Charitable IRA rollover: If you’re over age 70½, you can roll over up to $100,000 of IRA proceeds to a charity without paying tax on the distribution. This technique is often used to satisfy the rules for required minimum distributions (RMDs).

5.Research credits: This popular tax credit, which has been extended numerous times in the past, provides a tax credit equal to 20% of qualified expenses exceeding a base amount. Alternatively, a business can elect to use a simplified 14% credit.

6.Tuition-and-fees deduction: Taxpayers may deduct tuition and fees paid to a college in lieu of claiming one of the higher education tax credits. However, the maximum deduction of $4,000 is phased out based on modified adjusted gross income (MAGI).

7.Hiring credits: The Work Opportunity Tax Credit (WOTC) is available to employers hiring workers from one of several disadvantaged groups. Generally, the maximum credit is $2,400 per worker, although it can be high as $9,600 for certain veterans.

8.Mortgage loan forgiveness: This provision authorizes a tax exclusion for mortgage loan forgiveness on debts up to $2 million. The exclusion is available only on debt forgiveness for a principal residence.

9.Home energy credits: The residential energy credit has existed in various forms for years. For 2014, a maximum $500 credit may be claimed for 10% of qualified energy-saving expenditures like new heating and air conditioning systems.

10.Teacher classroom expenses: Teachers and certain other educators are able to deduct up to $250 of their out-of-pocket classroom expenses. This deduction is claimed above-the-line.

 

IRS Urges Taxpayers to Choose a Tax Preparer Wisely

More than half of taxpayers hire a professional when it’s time to file a tax return. Even if you don’t prepare your own Form 1040, you’re still legally responsible for what is on it.

A tax return preparer is trusted with your most personal information. They know about your marriage, your income, your children and your Social Security numbers – all of the sensitive details of your financial life. If you pay someone to prepare your federal income tax return, the IRS urges you to choose that person wisely. To do that, take some time to understand a few essentials.

Most tax return preparers provide outstanding service. However, each year, some taxpayers are hurt financially because they choose the wrong tax return preparer. Well-intentioned taxpayers can be misled by preparers who don’t understand taxes or who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee. Every year, these types of tax preparers face everything from penalties to even jail time for defrauding their clients.

Here are a few tips to keep in mind when choosing a tax preparer:

  • Check to be sure the preparer has an IRS Preparer Tax Identification Number (PTIN). Anyone with a valid 2015 PTIN is authorized to prepare federal tax returns. Tax return preparers, however, have differing levels of skills, education and expertise. An important difference in the types of practitioners is “representation rights”. You can learn more about the several different types of return preparers on IRS.gov/chooseataxpro.
  • Ask the tax preparer if they have a professional credential (enrolled agent, certified public accountant, or attorney), belong to a professional organization or attend continuing education classes. A number of tax law changes, including the Affordable Care Act provisions, can be complex. A competent tax professional needs to be up-to-date in these matters. Tax return preparers aren’t required to have a professional credential, but make sure you understand the qualifications of the preparer you select.
  • Check on the service fees upfront. Avoid preparers who base their fee on a percentage of your refund or those who say they can get larger refunds than others can.
  • Always make sure any refund due is sent to you or deposited into your bank account. Taxpayers should not deposit their refund into a preparer’s bank account.
  • Make sure your preparer offers IRS e-file and ask that your return be submitted to the IRS electronically. Any tax professional who gets paid to prepare and file more than 10 returns generally must file the returns electronically. It’s the safest and most accurate way to file a return, whether you do it alone or pay someone to prepare and file for you.
  • Make sure the preparer will be available. Make sure you’ll be able to contact the tax preparer after you file your return – even after the April 15 due date. This may be helpful in the event questions come up about your tax return.
  • Provide records and receipts. Good preparers will ask to see your records and receipts. They’ll ask you questions to determine your total income, deductions, tax credits and other items. Do not rely on a preparer who is willing to e-file your return using your last pay stub instead of your Form W-2. This is against IRS e-file rules.
  • Never sign a blank return. Don’t use a tax preparer that asks you to sign an incomplete or blank tax form.
  • Review your return before signing. Before you sign your tax return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it.
  • Ensure the preparer signs and includes their PTIN. Paid preparers must sign returns and include their PTIN as required by law. The preparer must also give you a copy of the return.
  • Report abusive tax preparers to the IRS. You can report abusive tax return preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. You can get these forms on IRS.gov.

IRS FS-2014-11, December 2014

With the complications associated with the Affordable Care Act (Obamacare) it is very important for you to get assistance with filing your tax return this season.  Please give us a call with any questions concerning your return preparation.  We have PROFESSIONALS on staff that know the answers!

EA vs. CPA: Which is Right for You?

By Kayleigh Kulp

Published March 26, 2012

FOXBusiness

When trying to find a professional tax preparer, consumers face an alphabet soup of choices.

Most people turn to the two well-known groups of licensed tax professionals: certified public accountants (CPA) and enrolled agents (EA). No matter the acronym after their name, the first step in your decision-making process is to make sure the person is licensed.

“If they’re able to answer your questions and you understand, that’s when you want to continue to work with them,” says Alan Pinck, an enrolled agent with A. Pinck & Associates in San Jose, Calif. “Communication is key. It shouldn’t be an intimidating situation. We have enough intimidating situations in our lives. When mistakes happen, it doesn’t hurt to get a second opinion.”

Here’s a breakdown of the two professions:

An EA is authorized by the U.S. Department of the Treasury to represent taxpayers before the IRS for audits, collections, and appeals, according to the National Association of Enrolled Agents (NAEA). EAs advise, represent and prepare tax returns for individuals, partnerships, corporations, estates, trusts and any entities with tax-reporting requirements.

EA’s only tend to focus on preparing taxes, and many specialize in tax resolution. In addition to an IRS-administered testing and application process, enrolled agents must complete at least 72 hours of continuing education every three years.

A CPA’s bread and butter tends to be performing tax, accounting and financial services to businesses. Not a ll specialize in taxation, and some specialize in more than one service. Most states/jurisdictions require at least a bachelor’s degree, two years public accounting experience and a passing score on the CPA exam to obtain a license. The IRS does not require attorneys and certified public accountants to complete continuing education, but some state licensing offices have added additional requirements. In Massachussetts, for example, CPAs need 80 hours of continuing education every two years.

Starting in 2013, the IRS will require tax preparers to pass a tax exam and obtain 15 hours of continuing education every year.

To sum it up simply, “Taxes are laws, and accounting is numbers,” Pinck says. The price for preparing a return may even be comparable between a CPA and a EA.

So how do you choose which type of professional is right for you? It’s not always black and white and requires an evaluation by each individual, but here are some general guidelines from the experts:

Choose an EA:

When you have out-of-state returns. Enrolled agents are the only taxpayer representatives who receive their unlimited right to practice from the federal government (CPAs and attorneys are licensed by the states). That means if you need to file in more than one state and eventually need representation before that state in an audit or resolution case, the same EA can do it, Pinck says.

When you need help resolving an IRS dispute or expect to owe. People who don’t have the resources to pursue a taxation attorney often hire EAs instead for civil resolution cases, according to David Miles, an enrolled agent with 20/20 Tax Resolutionin Broomfield, Co. Not only do EAs rates tend to be more affordable, they can their tax law expertise to represent clients in tax proceedings, audit hearings and appeals.

EAs help ensure clients are treated appropriately by the IRS, work out payment plans on the best possible terms, and ensure the IRS follows laws that protect taxpayers, Miles says.

Choose a CPA when:

A little accounting guidance wouldn’t hurt. If you own a small business, hiring a CPA with a bookkeeping and reporting background can help you get organized and on track for the next year. “When you have a couple million dollars in business, some of the accounting can get complicated. We make sure everything is in the right bucket,” says Irene Wachsler, a CPA with Tobolsky & Wachsler CPAs in Massachussetts.

An audit of your business deductions, expenses and income is in order. A CPA’s main differentiator is the ability to attest an audit, which means it affirms to the IRS that financial statements are truthful, says Theodore Flynn, CEO and president of the Massachusetts Society of CPAs. To do that, a CPA will request bank statements and other proof, which limits the possibility of mistakes, Wachsler says. But make sure any professional you hire will guarantee their work on your returns, she adds. That means they agree to represent you later pro bono if there’s a problem with the return.

Essential Solutions LLC has both professionals on staff to serve our clients needs.  Still have questions?  Give us a call.

The Top 10 Reasons to Contact Your EA

Minimizing your taxes requires a year round effort. The following events will have an impact on your tax liability. In most cases, proper tax planning can minimize any negative tax consequences. Whenever a situation on this list occurs, call your EA.

 

  1. Buying, selling or exchanging any real property (land or building), including converting your residence to a rental; selling securities.
  2. Changing your marital status (marriage, divorce).
  3. Making gifts to any one person totaling more than $14,000 in any calendar year.
  4. Taking out a loan using your home or other real property as security.
  5. Going into business for yourself.
  6. Expecting a significant change in your income and/or deductions.
  7. You receive correspondence from the Internal Revenue Service or state taxing authority.
  8. Making contributions to or receiving distributions from retirement plans.
  9. Receiving an inheritance.
  10. Changing jobs or retiring.

 

 

 

 

 

 

 

 

 

What is the difference between an EA and a CPA. See the IRS chart below

Overview of Tax Return Preparer Requirements

The chart below provides an overview of the various categories of individuals who may prepare federal tax returns for compensation.

 

Category

PTIN

Tax Compliance Check

 Background Check

IRS Test

Continuing Education

Practice Rights

Enrolled Agents*

 Yes

 Yes

Proposals Pending

Yes (Special Enrollment Exam)

72 hours every 3 years

Unlimited

CPAs**

 Yes

 Yes

Proposals Pending

No

Varies

Unlimited

Attorneys**

 Yes

 Yes

Proposals Pending

No

Varies

Unlimited

Supervised Preparers

 Yes

 Yes

Proposals Pending

No

No

Limited

Non-1040 Preparers

 Yes

 Yes

Proposals Pending

No

No

Limited

 

*Enrolled Agents have passed a three-part, comprehensive IRS exam covering individual and business returns. They must adhere to ethical standards and complete 72 hours of continuing education courses every three years. EAs have unlimited practice rights before the IRS, which means they can represent clients for any tax matter.

**CPAs and Attorneys have unlimited practice rights before the IRS.

†To determine if you are a supervised preparer, view the fact sheet

‡ If you only prepare Forms 1040-PR and 1040-SS, you are considered a non-1040 preparer