What Is a Registered Tax Return Preparer?

Navigating the world of tax preparation can be overwhelming when trying to ensure the person handling your finances is qualified. Since many people seek professional help with their returns, choosing a preparer is a significant decision. Understanding the different credentials and qualifications is the first step in protecting your interests and ensuring compliance with tax laws.

The Registered Tax Return Preparer Program

The “Registered Tax Return Preparer” is a now-defunct credential from the Internal Revenue Service (IRS). In 2010, the IRS launched a program to regulate the tax preparation industry, which lacked uniform oversight. The program aimed to establish minimum standards for paid preparers who were not already credentialed as attorneys, Certified Public Accountants (CPAs), or Enrolled Agents (EAs) to enhance competency and protect taxpayers.

To earn the Registered Tax Return Preparer (RTRP) designation, individuals were required to obtain a Preparer Tax Identification Number (PTIN), pass a competency exam, and complete 15 hours of continuing education annually. The competency test covered individual tax return preparation and ethical responsibilities. Those who passed the exam and a tax compliance check were granted the RTRP credential.

The RTRP program was short-lived. In 2013, a lawsuit, Loving v. IRS, argued that the IRS had overstepped its authority by creating these licensing requirements. The U.S. District Court for the District of Columbia ruled in favor of the preparers, halting the program. The decision was affirmed by the U.S. Court of Appeals in 2014, leading the IRS to permanently discontinue the RTRP program, and the credential is no longer issued or recognized.

Current Types of Federal Tax Preparers

Tax preparers are categorized by their qualifications and ability to represent clients before the IRS. Preparers with unlimited representation rights can represent clients on any tax matter, including audits, payment issues, and appeals, regardless of who prepared the return. This group includes Attorneys, Certified Public Accountants (CPAs), and Enrolled Agents (EAs).

Attorneys and CPAs are licensed at the state level with extensive education and examination requirements. Enrolled Agents are licensed directly by the IRS after passing a comprehensive exam covering taxation or through qualifying IRS work experience. An EA’s rights to practice before the IRS are federally authorized and uniform across all states.

A second category of preparers has limited representation rights. These are primarily participants in the IRS’s voluntary Annual Filing Season Program (AFSP). To receive an AFSP Record of Completion, preparers must obtain a PTIN, complete a set number of continuing education hours, and consent to the practice obligations in Treasury Department Circular No. 230.

Their representation rights are restricted, as they can only represent clients whose returns they prepared and signed, and only during initial audits by revenue agents or customer service representatives. Their rights do not extend to representing clients before the IRS Office of Appeals or in other complex proceedings.

The final group consists of preparers who only have a Preparer Tax Identification Number (PTIN). The IRS requires anyone who prepares federal tax returns for compensation to have a PTIN. Obtaining one involves registering with the IRS and paying a fee, with no competency or education requirements. These “unenrolled preparers” have no rights to represent their clients before the IRS.

Verifying Preparer Credentials

You should verify the credentials of any tax professional you consider hiring. The IRS provides a free public tool for this: the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This online database is the most reliable source for confirming a preparer’s qualifications and is accessible on the IRS website.

You can search by a preparer’s last name or location, and the results will display their name, city, and state. The directory lists the specific professional credentials held, such as CPA, Attorney, Enrolled Agent, or an Annual Filing Season Program Record of Completion. This allows you to confirm if a preparer’s claimed qualifications are officially recognized.

Information Needed to Work With a Tax Preparer

To ensure an efficient tax preparation process, you should gather all necessary documents before meeting with your preparer. They will require several categories of information to accurately complete your return.

• Personal Information: Full legal names, exact dates of birth, and Social Security Numbers for yourself, your spouse, and any dependents you intend to claim.
• Income Documentation: Forms W-2 from employers and various Forms 1099 that report other payments, such as nonemployee compensation (1099-NEC), interest (1099-INT), or dividends (1099-DIV). Also include records for any other income, such as from rental properties or self-employment.
• Deduction and Credit Records: To maximize your refund or minimize tax liability, provide records to substantiate deductions or credits. This includes receipts for charitable contributions, records of medical expenses, and statements for educational costs like Form 1098-T. For homeowners, provide Form 1098 for mortgage interest and records of property taxes paid.
• Previous Year’s Tax Return: Providing a copy of your prior year’s federal and state tax returns gives your preparer a baseline understanding of your financial situation. It also helps ensure consistency in reporting certain items from one year to the next.