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What's In a Name

Google “tax preparers near me” and you undoubtedly will get dozens of listings for nearby tax businesses. How do you choose a tax preparer from all the choices available to you? If you are looking for a tax professional, you’ve probably already decided against preparing your own return. (Still trying to decide? See our previous discussion on DIY vs. hiring a professional .) While it’s always a good idea to ask trusted friends for recommendations, making sure you understand the various professional designations can help you choose wisely.

First, it’s important to understand that the field of tax preparation is largely unregulated. Anyone can call themself a tax preparer, and obtaining the IRS-required Preparer Identification Number is a simple process that involves no education requirements, background checks, or other proof of ability to competently prepare tax returns.

However, there are several voluntary credentials that reputable tax professionals may hold. While a rose by any other name may still smell as sweet, there can be vast differences between someone simply calling themself a tax preparer and those who have taken the time to obtain and maintain professional credentials.

CPAs, or Certified Public Accountants, are required to have a college degree, pass a rigorous test, meet experience requirements, and maintain ongoing continuing education. CPAs are capable of doing far more than preparing taxes, and their fees may reflect this. The same is true for tax attorneys, who spend much of their time on complex tax representation cases.

Many people incorrectly call anyone who works in the accounting field a “CPA.” The proper term, especially in North Carolina, for non-CPAs is simply “accountant.” While some states regulate the use of the term, in North Carolina anyone who performs bookkeeping, payroll, tax, and related services may call themselves an accountant. There are professional organizations to help accountants keep their skills up to date. The N.C. Society of Accountants provides a framework for continuing education while setting standards for ethics and professionalism. Both partners at Down South are members of the Eastern Chapter of this organization.

The IRS licenses Enrolled Agents (EAs) who must pass an exam demonstrating proficiency in federal tax planning, individual and business tax return preparation, and taxpayer representation. Enrolled Agents must meet continuing education requirements related to tax law and ethics. EAs have unlimited practice rights, meaning they can represent any taxpayer regarding any tax matter before the IRS. Down South partner Karen Spruill has maintained Enrolled Agent status since 2013 and has a long record of assisting clients with their tax problems.

The IRS also offers tax professionals its Annual Filing Season Program (AFSP), a voluntary process that requires participants to complete continuing education courses, pass an annual exam on current tax regulations, and adhere to ethics standards each year. AFSP participants are allowed to represent clients whose returns they prepared in many IRS matters. Both Karen and partner Deborah Davis maintain the AFSP credential. For more on IRS recognized credentials, see this link. The IRS also publishes an annual directory where anyone may check their tax preparer’s credentials.

Obviously, there are other things that also matter when choosing a tax professional. However, with such an unregulated industry, using tax preparers who have invested time and effort into acquiring a professional credential simply makes sense. Need help in making sense of your tax returns? Call us and let us put our expertise to work for you!

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