Various designations for tax professionals.

Many taxpayers are confused about different tax professionals that prepare tax returns.  Even though the current law allows anybody to prepare and file your taxes, it’s strongly recommended to use a tax professional that has one of the nationally recognized tax designations.  The IRS is currently working on legislation that will regulate all tax preparers.  Until that happens you should try to use a reputable and experienced tax pro.  This article will help you understand the basics about different tax professionals and their designations.

ATP – Accredited Tax Preparer.  This designation is administered by Accreditation Counsel of Accountancy and Taxation.  In order to qualify for ATP designation a tax professional needs to meet educational requirements and pass 3.5 hour exam consisting of 100 questions relating to preparation of individual, corporate, and partnership taxes.  The exam is administered in May and December of each year.  In addition, the candidate must have 3 years of tax preparation experience before he/she can receive ATP designation.  In order to keep current with tax laws and regulations, the ATP holder needs to meet CPE (continuing professional education) requirements of 72 hours per three-year cycle of which 4 hours must be in Ethic and 68 hours of particular area of tax practice.

CPA – Certified Public Accountant.  This designation is administered by American Institute of Certified Public Accountants.  In order to qualify for CPA designation a tax professional needs to meet educational requirements and pass four-part exam.  Each part ranges from 2.5 to 4.5 hours and is composed of 24 or 30 multiple-choice questions and simulations with a condensed case studies.  Those parts are: Financial Accounting and Reporting, Auditing, Regulation and Business Environment.  The exam is offered in January & February; April & May; July & August; and October & November of each year.  Depending on the State where tax professional will be practicing, he/she must have related work experience under the watch of CPA in any relative fields; tax, auditing or accounting.  In NY State the requirement is 2 years, in NJ State the requirement is 1 year.   In order to keep current with tax laws and regulations the CPA holder also needs to meet CPE requirements.  CPAs that are in Public Practice need to complete 120 hours of CPE over a three year period.  A CPA who is not in Public Practice needs to complete 90 hours over a three year period.  The CPE must include 4 hours of Ethics.

CRTP – California Registered Tax Preparer.  (Only for CA tax professionals)  This designation is administered by California Tax Education Council.  In order to qualify for CRTP designation a tax professional needs to meet educational requirements and pass an exam consisting of 538 open-note and open-publications tax questions.  A candidate can take an exam any time.  There is no experience requirement for CRTP.  In order to keep current with tax laws and regulations, the CRTP holder needs to meet 20 hours of CPE each year.

CTS – Certified Tax Specialist.  In order to qualify for CTS designation the tax professional needs to meet educational requirements and pass three part exam.  Each exam is 90 minutes, consisting of 75 questions and can be taken any time.  In addition, the candidate must have 2,000 hours of work experience in the financial service industry or a bachelor’s degree.   In order to keep current with tax laws and regulation, the CTS holder needs to meet 15 hours of CPE each year.

CTP – Chartered Tax Professional.  The CTP certificate program is comprised of 6 courses in Federal Income Tax Preparation.  Upon completion of each course the candidate will take an examination.  Candidates are required to take an on-line exam for each course with a passing score of 80% or better.  In addition, the candidate must have 2 years of tax preparation experience.  In order to keep current with tax laws and regulations, the CTP holder needs to meet 16 hours of CPE each year.

EA – Enrolled Agent.  This designation is administered by the IRS.  In order to qualify for EA designation a candidate needs to pass three part exam.  Those parts are: Individual Taxation, Business Taxation, Representation Practice and Procedures.  Each part is about 3.5 hour consisting of about 100 questions.  The exam can be taken anytime during the year.  There is no experience requirement for EAs.  An individual can also qualify for EA designation by having worked for the IRS for five years in a position that regularly interprets and applies the tax code and its regulations.  In order to keep current with tax laws and regulation the EA holder also needs to meet CPE requirements of 72 hours per three year cycle, of which 2 hours must be in Ethics.

Tax Attorney can also prepare and file your taxes.

Note that ATP, CPA, EA and Tax Attorneys are recommended to be used for your tax preparartion and filing.  Only CPA, EA, or Tax Attorney can represent the taxpayer before the IRS.

Disclaimer; this article is for informational purposes only.  Because educational and examination requirements for the above tax designations periodically change please feel free to comment or sent us updated requirements.