How To Become Irs Certified Tax Preparer

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Becoming an IRS-certified tax preparer can be a rewarding career path, offering the opportunity to help individuals and businesses navigate the complexities of tax law. While the term "IRS Certified Tax Preparer" isn't a specific IRS credential in itself, there are several pathways to becoming a recognized and qualified tax professional who can ethically and competently prepare federal tax returns for compensation. This guide will walk you through the various options, step-by-step.

Are you ready to embark on a journey to become a trusted tax advisor? Let's dive in!

Step 1: Understand the Landscape of Tax Preparation Credentials

Before you begin your journey, it's crucial to understand that there isn't a single "IRS Certified Tax Preparer" certificate. Instead, the IRS recognizes several levels of tax professionals. Your choice will depend on your career aspirations, the level of representation you desire, and the time and effort you're willing to invest.

Sub-heading: Key Distinctions Among Tax Preparers

Non-Credentialed Tax Preparers (with PTIN and AFSP): These are individuals who prepare tax returns for a fee but are not attorneys, CPAs, or Enrolled Agents. While they don't have unlimited representation rights before the IRS, they can gain limited representation rights for clients whose returns they've prepared if they participate in the Annual Filing Season Program (AFSP). This is often the starting point for many aspiring preparers.
Annual Filing Season Program (AFSP) Participants: This is a voluntary program by the IRS that aims to recognize the efforts of non-credentialed preparers who increase their knowledge and competency through continuing education. By completing the AFSP requirements, you receive a "Record of Completion" from the IRS and are included in a public directory of tax preparers.
Enrolled Agents (EAs): This is the highest credential the IRS awards. Enrolled Agents are federally licensed tax professionals who have unlimited practice rights before the IRS. This means they can represent any taxpayer regarding any tax matter at any IRS office. Becoming an EA requires passing a rigorous three-part exam.
Certified Public Accountants (CPAs): CPAs are licensed by individual states and typically have broader accounting and financial responsibilities beyond just tax preparation. They also have unlimited practice rights before the IRS.
Attorneys: Licensed attorneys can also represent clients before the IRS and have unlimited practice rights.

For the purpose of this guide, we'll focus primarily on becoming an AFSP participant or an Enrolled Agent, as these are direct pathways to being recognized by the IRS specifically for tax preparation and representation.

Step 2: Obtain Your Preparer Tax Identification Number (PTIN)

Regardless of which path you choose, the very first mandatory step for any paid tax preparer is to obtain a Preparer Tax Identification Number (PTIN) from the IRS. You cannot prepare federal tax returns for compensation without one.

Sub-heading: The PTIN Application Process

Gather Necessary Information: Before you start the online application, ensure you have:
- Your Social Security Number (SSN).
- Personal information (name, mailing address, date of birth).
- Business information (if applicable).
- Previous year's individual tax return information.
- Any professional certification information (e.g., CPA, attorney, Enrolled Agent, if you already hold one).
- Explanations for any felony convictions or tax obligations (if applicable).
Create an IRS Online PTIN Account:
- Go to the official IRS website (irs.gov) and navigate to the PTIN registration section for tax professionals.
- You'll need to create a secure online account. This usually involves setting up a username and password and answering security questions.
Complete the Online PTIN Application:
- Once your account is set up, log in and select the option to apply for a new PTIN.
- Carefully fill out all the required fields with the information you gathered in step 2.1.
- The application includes a section where you consent to adhere to the duties and restrictions relating to practice before the IRS as outlined in Treasury Department Circular 230. This is a critical agreement.
Pay the Application Fee:
- There is a non-refundable fee associated with obtaining or renewing your PTIN. The fee amount can change, so check the IRS website for the most current fee. Payment is typically made online via credit card, debit card, or direct debit from a bank account.
Receive Your PTIN:
- Congratulations! If you apply online, you will usually receive your PTIN immediately upon successful completion of the application and payment. If you apply by mail (using Form W-12), it can take 4-6 weeks to receive your PTIN. Keep this number secure as you'll need to include it on every federal tax return you prepare.
- Remember: Your PTIN must be renewed annually. The renewal period typically begins in mid-October for the upcoming tax season.

Step 3: Choose Your Path to IRS Recognition (AFSP or EA)

Now that you have your PTIN, you can decide how "certified" you want to become.

Option A: Becoming an Annual Filing Season Program (AFSP) Participant

The AFSP is a great option for non-credentialed preparers who want to demonstrate their commitment to professionalism and gain limited representation rights.

Complete Required Continuing Education (CE):
- To obtain an AFSP - Record of Completion, you generally need to complete 18 hours of IRS-approved continuing education annually. These hours must include:
  - 6-hour Annual Federal Tax Refresher (AFTR) course with a knowledge-based comprehension test: This course covers filing season issues and tax law updates. The test must be administered by the CE provider at the end of the course.
  - 10 hours of other federal tax law topics.
  - 2 hours of ethics.
- Important Note: Some unenrolled preparers may be exempt from the AFTR course requirement if they have passed certain recognized state or national competency tests (e.g., passing Part 1 of the Special Enrollment Exam within the past three years, or being an active registrant in specific state-based preparer programs). If exempt, they still need to complete 15 hours of CE (10 federal tax law, 3 federal tax law updates, and 2 ethics).
- Find IRS-Approved CE Providers: The IRS provides a list of approved CE providers on its website. Ensure the provider you choose is IRS-approved to ensure your hours count. Many tax software companies, professional organizations, and educational institutions offer these courses.
Consent to Circular 230 Obligations:
- As part of the AFSP process, you must consent to adhere to the specific practice obligations outlined in Subpart B and Section 10.51 of Treasury Department Circular No. 230. This essentially means you agree to ethical standards and best practices for tax professionals. You will typically consent to this electronically when renewing your PTIN or accepting your AFSP Record of Completion.
Receive Your AFSP – Record of Completion:
- Once you have completed all the CE requirements and renewed your PTIN for the upcoming year, the IRS will generate your AFSP – Record of Completion. If you have an online PTIN account, you will receive an email with instructions on how to sign the Circular 230 consent and access your certificate in your secure online mailbox.
- This record allows you to be included in the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications, which can enhance your credibility with clients.

Option B: Becoming an Enrolled Agent (EA) – The Highest IRS Credential

Becoming an Enrolled Agent is a more intensive but highly rewarding path, granting you unlimited representation rights before the IRS.

Pass the Special Enrollment Examination (SEE):
- The SEE is a comprehensive three-part examination administered by Prometric on behalf of the IRS.
- Part 1: Individuals (Covers individual taxation)
- Part 2: Businesses (Covers business taxation, including partnerships, corporations, and trusts)
- Part 3: Representation, Practices, and Procedures (Covers ethical considerations, practice before the IRS, and specific procedures)
- Each part is a separate exam. You can take them in any order and at your convenience. You must pass all three parts within a three-year rolling window.
- Study Materials: Prometric and various tax education providers offer study guides, practice exams, and review courses to help you prepare for the SEE. The IRS also provides publications that are essential study resources (e.g., Publication 17 for individuals, Publication 334 for small businesses, and Circular 230).
Apply for Enrollment (Form 23):
- Once you have successfully passed all three parts of the SEE, you must apply for enrollment on Form 23, Application for Enrollment to Practice Before the Internal Revenue Service, within one year of passing the final part. This application is submitted online through Pay.gov.
- There is an application fee associated with Form 23.
Pass a Suitability Check:
- The IRS will conduct a thorough suitability check as part of your EA application. This includes:
  - Tax Compliance Check: The IRS will review your personal and business tax records to ensure you are compliant with your own tax obligations (e.g., timely filing and payment of taxes).
  - Criminal Background Check: A background check will be conducted to assess any criminal history.
  - Credit Check: A credit check may also be part of the suitability review.
- Any history of tax non-compliance or serious criminal offenses could result in denial of enrollment.
Receive Your Enrollment Card:
- Upon successful completion of all steps, including the suitability check, the IRS will issue you an enrollment card, officially recognizing you as an Enrolled Agent.
Maintain Your Enrolled Agent Status:
- To maintain your EA status, you must complete 72 hours of continuing education (CE) every three years, with a minimum of 16 hours annually, and at least 2 hours of ethics each year.
- You also need to renew your PTIN annually and your EA enrollment every three years.

Step 4: Consider Getting an Electronic Filing Identification Number (EFIN)

If you plan to prepare more than 10 tax returns for a fee in a calendar year, the IRS requires you to file those returns electronically (e-file). To do this, you will need an Electronic Filing Identification Number (EFIN).

Sub-heading: How to Apply for an EFIN

Create an IRS e-Services Account:
- Go to the IRS e-Services website and create an account. This is separate from your PTIN account.
Complete and Submit the E-file Provider Application:
- The application process for an EFIN can take some time (up to 45 days), so plan ahead. You'll need to provide information about your tax office and any "Principal" or "Responsible Official" associated with it.
Pass a Suitability Check:
- Similar to the EA process, the IRS will conduct a suitability check on your tax office and individuals listed on your application. This may include a credit check, tax compliance check, criminal background check, and a check for prior non-compliance with IRS e-file requirements.

Step 5: Continuously Learn and Stay Updated

Tax laws are constantly changing. To be a competent and ethical tax preparer, continuous learning is not just a requirement for credentialed professionals (EAs and AFSP participants) but a professional necessity for everyone in the field.

Sub-heading: Strategies for Ongoing Professional Development

Attend Webinars and Seminars: Participate in IRS-sponsored webinars, tax forums, and events hosted by professional tax organizations.
Read IRS Publications and News: Regularly review IRS publications, notices, and news releases to stay informed about changes in tax law, procedures, and ethical guidelines.
Join Professional Organizations: Consider joining organizations like the National Association of Enrolled Agents (NAEA), National Association of Tax Professionals (NATP), or your state's society of CPAs. These organizations often provide valuable resources, continuing education, and networking opportunities.
Subscribe to Tax Newsletters: Many tax software companies and professional accounting firms offer newsletters with important tax updates.
Invest in Quality Tax Research Tools: Having access to reliable tax research software can be invaluable for navigating complex tax situations.

Step 6: Adhere to Ethical Standards

All tax preparers are expected to adhere to high ethical standards. Treasury Department Circular 230 outlines the regulations governing practice before the IRS.

Sub-heading: Key Ethical Considerations

Diligence: Exercise due diligence in preparing returns and advising clients.
Confidentiality: Protect taxpayer information.
Competence: Maintain the necessary knowledge and skill to provide accurate advice.
Truthfulness: Do not knowingly misstate facts or mislead the IRS.
Avoid Conflicts of Interest: Do not represent clients where a conflict of interest exists without proper disclosure and consent.

Step 7: Build Your Practice (If Applicable)

If you plan to open your own tax preparation business, there are additional steps beyond IRS certification.

Sub-heading: Essential Business Development Steps

Business Registration: Register your business with your state and local authorities.
Obtain Business Insurance: Consider errors and omissions (E&O) insurance to protect yourself from potential liability.
Marketing and Client Acquisition: Develop a marketing strategy to attract clients.
Choose Tax Software: Select reputable tax preparation software that meets your needs.
Set Up Secure Systems: Implement robust data security measures to protect sensitive client information.

10 Related FAQ Questions

Here are some frequently asked questions to help clarify your journey to becoming an IRS-recognized tax preparer:

How to obtain a PTIN?

You can obtain a PTIN by applying online through the IRS website (irs.gov/ptin) or by submitting a paper Form W-12. The online process is generally faster, often providing your PTIN immediately after approval and payment.

How to determine if I need to take the AFTR course for AFSP?

Most non-credentialed preparers seeking the AFSP Record of Completion must take the 6-hour Annual Federal Tax Refresher (AFTR) course with a test. However, certain individuals, like those who have passed Part 1 of the Special Enrollment Exam (SEE) within the last three years or are active in specific state-based tax preparer programs, are exempt from the AFTR course but still require 15 hours of other continuing education.

How to find IRS-approved continuing education (CE) providers?

The IRS provides a searchable directory of approved CE providers on its website. Look for providers that offer courses specifically designed to meet AFSP or Enrolled Agent CE requirements.

How to prepare for the Special Enrollment Examination (SEE)?

To prepare for the SEE, you can use study materials from Prometric (the test administrator), enroll in review courses offered by various tax education companies, and extensively study IRS publications related to individual, business, and representation tax topics.

How to renew my PTIN annually?

You can renew your PTIN online through your IRS PTIN account. The renewal period typically opens in mid-October each year, and it's essential to renew it before December 31st to prepare returns for the upcoming tax season.

How to check the status of an Enrolled Agent (EA)?

The IRS provides a public directory of federal tax return preparers with credentials, including Enrolled Agents, which you can use to verify an EA's status.

How to maintain Enrolled Agent (EA) status?

EAs must complete 72 hours of IRS-approved continuing education every three years, with a minimum of 16 hours annually, including at least 2 hours of ethics each year. They also need to renew their PTIN annually and their EA enrollment every three years.

How to apply for an Electronic Filing Identification Number (EFIN)?

You apply for an EFIN through the IRS e-Services website. The process involves creating an e-Services account, submitting an application, and undergoing a suitability check by the IRS.

How to comply with Circular 230 requirements?

Compliance with Circular 230 involves understanding and adhering to the ethical and professional standards for practice before the IRS. This includes diligence, confidentiality, competence, and avoiding conflicts of interest. Regular review of the Circular 230 document and attending relevant training can help ensure compliance.

How to start my own tax preparation business after becoming certified?

Starting your own tax preparation business involves registering your business with state and local authorities, obtaining necessary business insurance (like E&O insurance), developing a marketing plan, choosing appropriate tax software, and implementing robust data security measures to protect client information.

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