Essential Resources Every New Tax Preparer Should Have

Tax preparation can be a very challenging role. Whether you are the owner of a tax preparation business, a partner in the business, or a new tax preparer in the industry, having these tools and resources in your arsenal will make you a better tax professional.

Tax Education and Tax Reference Resources

Becoming a professional tax preparer takes time and personal financial investment. While some firms may train you once you are hired, it will be easier to get your foot in the proverbial door if you are bringing with you tax knowledge and credentials. There are currently no federal competency requirements for tax preparers but there is a voluntary tax preparer education program all the Annual Filing Season Program (AFSP). This program will help you set yourself apart from other tax pros who do not take the extra step to obtain the AFSP Record of Completion.

Tax laws change often, and it is the responsibility of the tax preparer to stay on top of those changes (or face the consequences of not doing so which can include fines and penalties). For this reason, the AFSP is done yearly. For seasoned tax preparers who wish to continue growing their knowledge and ability to assist their clients, there is the Enrolled Agent program. An Enrolled Agent is a federally licensed tax practitioner who has completed all three special enrollment exams. Enrolled Agents have yearly minimum continuing education requirements, and renew their license to practice every 4 years.

Aside from the formalized IRS approved continuing education courses for tax pros, new tax preparers should also look for any specific state competency requirements for tax professionals. Other useful training resources would be tax software tutorials, practice tax return modules, and access to training on other tools used in the tax office.

Reliable Tax Software

The single most important tool you will need is user-friendly tax software. Without a computerized tax program, tax preparers would be preparing client tax returns on paper, by hand, and while some tax preparers continue to do so, all paid preparers are required to e-file their tax returns if they prepare 10 or more returns a year for compensation so it makes sense that even paper-filed returns are primarily prepared in a professional tax program and then printed for mailing.

Tax software can be divided into two main categories: interview-based and professional. Interview-based tax software is just that: tax software that takes the answers from an in-program “Interview” and then compiles the tax return, formatting the tax return and placing all of the relevant figures in the appropriate places. Some interview software platforms give access to forms, while others do not. Interview-based tax software is a very efficient tool for low to medium difficulty level tax returns.

For more complicated tax returns, professional tax software will be more effective at ensuring accuracy and completeness of the tax returns. Professional tax software enables a tax preparer to access every tax form available for a given tax year. Using professional tax software is the best way to complete complicated tax returns because it allows the tax pro to get hands-on with the forms, allows linking of various forms for information flow-through, and it can run diagnostics on the tax return that look for errors and omissions. Professional tax software allows users to run productivity reports and offers an integrated mobile app for tax clients’ convenience.

Year-Round Support

Whole-office tax support & technical support is an often limited or overlooked need for new tax preparers. Look for tax software platforms offer tax support for tax-related issues such as applying tax credits, fixing a tax return, or e-filing issues. Tax publications, such as The Tax Book, are excellent for quick tax reference.  Technical support needs will vary based on personal ability and office computer and software particulars. For example, cloud-based software itself may not require technical support, but the computer on which you are accessing the platform could need support. Formal technical support would ensure that that the tax office is operating smoothly and safely (under a sound technical security plan).

Security Plan & Secure Messaging Tools

The preparation of tax returns requires the use of sensitive information which could be used in the commission of financial crimes. Tax Preparers come into contact with the private information of hundreds, sometimes thousands, of taxpayers in a given tax season. Normal day-to-day business operations for tax professionals includes electronically sending and receiving sensitive digital documents, requesting electronic signatures on sensitive documents, and requesting scanned copies of sensitive paper documents.  Tax offices have a requirement to maintain the paperwork used in the preparation of tax returns which makes tax offices are rich targets for cyber security attacks.  In the past, tax pros have not had any substantial liability related to the security of taxpayer information aside from the requirement to have it stored securely for as long as the law requires. When applying for a Preparer Tax Identification Number (PTIN), the IRS now alerts the tax pro to new data security requirements regarding the protection of taxpayer data. The IRS and relevant state departments of revenue all suggest that tax offices develop what is called a “Written Information Security Plan” (WISP) which details how sensitive data is used and stored. The IRS has a WISP template available for all interested parties.