A certified public accountant (CPA) is a licensed professional with advanced education and training in many areas of accounting and business. A licensed tax preparer does not need advanced degrees for basic tax preparation, but must demonstrate competence through a formal exam or employment with the IRS. Tax preparers focus on tax matters, but they don't necessarily have the same extensive educational background as an accountant. The quality of tax preparers can vary widely, so it's useful to consider different categories of tax preparers.
As mentioned above, public accountants study and are tested on much more than just taxes. They have knowledge and experience in many areas of accounting, including commercial audits, budget forecasting, variance analysis, and more. Many people (especially business owners) find that they need more than just tax preparation services. If this is your case, why would you work with an accountant for some financial matters and then have a tax preparer other than the CPA handle your tax return? Some people can just read a few books and start paying taxes.
A CPA must obtain an appropriate degree, pass a complicated exam, gain professional experience and face regulation from a state board. Without completing the proper degree, tax preparers won't have the basic accounting skills needed to prepare business tax returns. In addition, some simple items, such as extensions of losses from previous years, may be omitted from the current year's tax return due to a lack of understanding. Both certified public accountants (CPAs) and tax preparers are licensed professionals to prepare and file tax returns.
However, in the context of a CPA and a tax preparer, the main difference lies in their scope of work, level of experience and license. While certified public accountants are licensed professionals who offer a wide range of expert accounting services, tax preparers are not licensed and specialize solely in tax preparation. As a result, certified public accountants who choose to specialize in taxes tend to have more experience with certain tax topics than the typical tax professional. File a complaint if you have been financially affected by the misconduct or improper tax preparation practices of a tax return preparer.
Anyone can be a paid tax return preparer as long as they have an IRS Tax Preparer Identification Number (PTIN). The first is to file your taxes yourself; while this may be the most sensible option for those with extremely simple tax returns, if your return is more complex than a simple W-2 form, you may want to consider working with a professional. There is one exception: a tax preparer can take some additional steps to become a registered agent (EA) and then offer IRS auditing representation in addition to tax preparation services. Because non-CPA tax preparers only focus on taxes, they cannot provide ongoing services in other areas of accounting.
The IRS does not impose any education, experience, or licensing requirements for tax preparers to practice. This means that tax preparers are not required to take continuing education (CPE) courses, which are a requirement for all CPA professionals. If your tax situation is simple enough that you only need to organize your income and deductions on a tax return, you can make do with a tax preparer and generally pay a lower fee. You expect your preparer to be an expert in preparing taxes and to file your income tax return accurately.
However, you must have an active IRS Tax Preparer Identification Number (PTIN) to be authorized to prepare tax returns...