IRS Licensing of Tax Preparers

IRS Regulation of Tax Return Preparers

Historically, only, Oregon and California have regulated the tax preparation industry. In August 2008, the General Accounting Office released the following report “TAX PREPARERS – Oregon’s Regulatory Regime May Lead to Improved Federal Tax Return Accuracy and Provides a Possible Model for National Regulation”. In 2009, the IRS launched a series of nationwide forums to gather input from tax industry professionals and the public at large as it worked to design a system for regulating the industry.

In 2010, the IRS implemented a new program that required all paid tax preparers to obtain minimum amounts of education and pass a competency test. In 2013, the courts determined that the IRS lacks the regulatory authority to mandate education and testing of tax preparers. The courts confirmed, however, that the IRS has the authority to regulate who can practice before the IRS. For 2014 and future years IRS has implemented a new voluntary program that provides a pathway to a credential called the Annual Filing Season Program Record of Completion (AFSP). Beginning with the 2015 season, the IRS will publish and promote a public listing of all credentialed tax preparers and advise the public to seek out preparers who are included in the public record. Beginning in 2016, only tax preparers who hold a current AFSP or are otherwise exempt*, will be permitted to represent taxpayers before the IRS.

*Exempt preparers include CPAs, Attorneys, Enrolled Agents, Enrolled Retirement Plan Agents, and Enrolled Acutaries provided they are currently licensed and in good standing within their licensing jurisdictions.

Benefits of obtaining the AFSP Record of Completion

The value of staying educated and knowledgeable on tax law cannot be underestimated. Attracting and keeping good long-term clients is the key to ensuring success as a professional tax preparer. The new AFSP program will be promoted to the public by the IRS and will, for the first time, provide the public with access to a system that allows them to evaluate the credentials under which a preparer is providing tax preparation services. The AFSP is a minimum credential that will confer the following benefits to tax preparers:

For 2015 filing season, inclusion in the IRS data-base of credentialed tax preparers.
For 2016 and future years, limited representation rights with respect to tax returns completed by the tax preparer.

Exempt Individuals

The IRS is quick to point out that the AFSP program is a minimal program intended to encourage tax preparers to obtain minimum standards of education. The program does not apply to exempt tax preparers who already hold higher-level credentials. For example: Enrolled Agents, CPAs, and attorneys possess licenses which give them unlimited practice rights before the IRS.

All paid tax preparers must register with IRS and receive a PTIN.