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How to Choose a Tax Preparer Amid All the Alphabet Soup


NEW YORK (MainStreet ) — There are a variety of professional credentials or licensing designations that appear as initials after a person’s name to identify his area of expertise - AIA, CFP, CPA, CLU, DVM, EMT, JD, LPA, MD, PE, PhD, RN.

When it comes to preparing Form 1040s, the only initials that indicate the individuals who possess them have proven that they are competent, via testing, and/or remain up-to-date ,via annual required continued professional education (CPE), in Form 1040 preparation are -

AFSP - Annual Filing Season Program

This is a voluntary tax preparation credential administered by the Internal Revenue Service.

The IRS does not issue to participants an actual identifiable credential or initialed designation. Those who meet the program requirements will be issued a “Record of Completion” certificate and be added to a database on “to help taxpayers determine return preparer qualifications.”

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In order to receive a Record of Completion, currently unenrolled preparers must complete 18 hours of CPE in taxes annually. The CPE must include:

  • six hours of a federal tax filing season refresher course,
  • two hours of ethics, and
  • ten hours of other federal tax law topics.

The program does not require an initial competency test, but participants must pass a comprehension test

upon completion of the filing season refresher course each year.

Preparers who have previously passed the RTRP competency exam (see below), are state licensed and passed an exam covering federal tax matters; have passed an examination “covering federal tax matters administered by an entity recognized by the IRS as an eligible entity,” like the tests required for the Accreditation Council for Accountancy and Taxation credentials (see below); or have passed Part 1 of the EA exam in the last two years are not be required to take the annual six-hour refresher course (they must instead take three hours per year in tax “updates”) or pass the annual comprehension test

ATP - Accredited Tax Preparer and ATA – Accredited Tax Advisor

The ATA credential identifies preparers who handle sophisticated tax planning issues, including planning for owners of closely held businesses, planning for the highly compensated, choosing qualified retirement plans and performing estate tax planning. The designation covers tax returns for individuals, business entities, fiduciaries, trusts and estates. To become an ATA you must have five years (again a tax filing season = one year) of experience in tax preparation, compliance, tax planning, and consulting, of which 40% must be in tax planning and consulting, and pass a competency exam. An ATA must maintain 90 hours of CPE during each three-year cycle, or 30 CPE hours per year.

Category: Taxes

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