TYPES OF PREPARERS
TAX-PREP CHAINS
National companies such as H&R Block and Jackson Hewitt have some licensed professionals — H&R Block has 8,500 enrolled agents out of 80,000 tax professionals it employs during peak tax season. Jackson Hewitt has 25,000 tax preparers. Both companies require every preparer to pass an initial exam. Jackson Hewitt requires its pros to pass its exam every year; H&R Block requires a minimum number of hours of continuing education each year plus testing in order to achieve a higher certification level.
If you go through one of these tax offices, you have the benefit of certain protections that leave you off the hook if something is amiss with your return. For example, if H&R Block makes an error on your return, the company will pay any resulting penalties.
VOLUNTEER INCOME TAX ASSISTANCE
This IRS program provides free tax return help to several groups of people, generally those with annual incomes of $54,000 or less, the elderly, disabled and those who speak limited English. The program had more than 90,000 volunteers last year, who all have to go through at least a basic training course and pass a certification test. There are VITA sites across the country, often in places such as community centers and schools.
ENROLLED AGENT
These are professionals certified by the Treasury Department specifically to deal with tax-related issues and represent taxpayers in front of the IRS — which is basically a fancy way of saying they are official tax experts. Enrolled agents have to pass a three-part exam and a background check or have worked for the IRS for at least five years in a position that required them to interpret the tax code.
They also have to adhere to certain ethical stands — e.g., you can’t charge a percentage of a client’s tax refund as the fee for doing their return — and complete a minimum number of hours of continuing education each year.
CERTIFIED PUBLIC ACCOUNTANT
CPAs are licensed financial experts, though they don’t necessarily focus entirely on taxes. They deal with clients’ personal finances and accounting needs, too. Like enrolled agents, they also have to pass an exam plus complete a certain amount of work experience. Most of them are likely equipped to file tax returns.
“The vast, vast majority of CPAs in public practices have to know about taxes because that’s a big, big portion of their business,” says Michael Eisenberg, a CPA at Miller Ward & Co. in Encino, Calif.