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Licensing Requirements For Your Tax Preparation Business
Must I obtain an IRS or State license or approval to start a tax preparation business?

Federal Tax Preparer Requirements as of June 1, 2016:

In addition to an Electronic Filing Identification Number (EFIN) tax preparers need a Preparer Tax Identification Number (PTIN). Tax preparers are not required to complete competency testing or to take Continuing Education. There is currently no nationwide regulation of tax preparers.

The Registered Tax Return Preparer (RTRP) Program
On January 1, 2012 the IRS implemented a nationwide program for the regulation of tax preparers - the Registered Tax Return Preparer Program. The requirements included registering with the IRS, a competency exam and annual Continuing Education. Subsequently, the United States District Court for the District of Columbia enjoined the IRS from enforcing the requirements of the RTRP program. The IRS appealed. Subsequently, in its February 2014 decision, the U.S. Court of Appeals for the District of Columbia Circuit found that the IRS had "insufficient statutory support for the IRS' regulation of federal tax return preparers."

PTIN Applicants
Tax preparers applying for a PTIN must provide information about whether they are supervised and whether they prepare Form 1040 series returns. Supervised tax preparers are individuals who do not sign, and are not required to sign, tax returns as a paid tax return preparer but are:

  • Employed by attorney or CPA firms, or
  • Employed by other recognized firms that are at least 80 percent owned by attorneys, CPAs, or Enrolled Agents and Who are supervised by an attorney, CPA, Enrolled Agent, Enrolled Retirement Plan Agent, or Enrolled Actuary who signs the tax returns prepared by the supervised tax preparer, as the paid tax return preparer

When applying for or renewing a PTIN, supervised tax preparers must provide the PTIN of their supervisor. The supervisor's PTIN must be a valid and active PTIN.

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Supervised tax preparers may not:
  • Sign any tax return they prepare or assist in preparing
  • Represent taxpayers before the IRS in any capacity
  • Identify themselves as a Circular 230 tax practitioner

Who is a non-Form 1040 series Tax Preparer?
Non-Form 1040 series tax preparers are individuals who do not prepare, or assist in the preparation of, any Form 1040 series tax return or claim for refund, except a Form 1040-PR or Form 1040-SS, for compensation.

When applying for or renewing a PTIN, non-Form 1040 series tax preparers must certify that they do not prepare, or assist in the preparation of, any Form 1040 series tax return or claim for refund, except a Form 1040-PR or Form 1040-SS, for compensation.

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State Tax Preparer Requirements as of June 1, 2016:
Individual states set their own requirements for the licensure and registration of tax preparers. Some states require only that tax preparers have a valid PTIN, while others require education and testing. California, Maryland, New York, and Oregon require licensing of paid tax preparers. In 46 states and the District of Columbia, paid tax preparers are not required to have a state issued license.

Preparers who are CPAs, attorneys, or Enrolled Agents may be exempt from some or all state tax preparer registration requirements.

Below are links to the web sites of the four states mentioned above.

California Tax Education Council:
Maryland Division of Occupational and Professional Licensing:
New York State Department of Taxation and Finance:
Oregon Board of Tax Practitioners:

Regardless of which state you are in, be sure to visit your state's website to confirm your state's current licensing and registration requirements for tax preparers by clicking here: 

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Our Publications
Basic Federal Income Tax Course Advanced Federal Income Tax Course The Tax Preparer's Federal Due Diligence Requirements The Tax Preparer's Filing Season Supplement
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