At the time this page was written, the IRS was in the process of instituting a new system of regulating certain tax preparers who had not been previously regulated, creating two new types of tax preparers (Registered Tax Return Preparers, and Supervised Tax Preparers) as described below. On January 18, 2013 a court ruled that the IRS did not have the authority to regulate mere taxpreparers, only licensed practioners (see below) who represent taxpayers (i.e., attorney, CPAs and Enrolled Agents).

It is unclear at this time what the final resolution will be. The IRS is appealing the ruling. If that fails, the IRS may ask Congress to give them the authority. Given this uncertainty, we will leave our web page "as-is" pending final resolution of the matter.

A spokesman for the National Association of Enrolled Agents said “Some would argue, in fact, that the decision is a victory for those who would like the right to remain incompetent, to remain completely ignorant of the many annual changes in tax law and administrative procedure, and to foist the cost of their willful ignorance onto their clients.”

LICENSED PRACTITIONERS (Full practice rights)

Federally-authorized tax practitioners are empowered by the United States Department of the Treasury to represent taxpayers before all administrative levels of the IRS. 

This group includes:

• Attorneys
• Certified Public Accountants (CPA)
• Enrolled Agents (EA)

All licensed practitioners work for you, the taxpayer, not the IRS.

What is an Enrolled Agent?

Per the official IRS website: "An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee. Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses every three years."

Enrolled agents, like attorneys and certified public accountants (CPAs), have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before. Learn more about enrolled agents in Treasury Department Circular 230 (PDF)." [Emphasis added. See our Legal Notices page for more information. ]

Unlike attorneys and CPAs, who may or may not choose to specialize in taxation, all Enrolled Agents specialize in taxes. EAs are the only taxpayer representatives who receive their right to practice from the U.S. Government. CPAs and attorneys are licensed by the states.

For more information regarding Enrolled Agents, visit the National Association of Enrolled Agents website at www.naea.org.

REGISTERED TAX RETURN PREPARERS (Limited practice rights)

[This section may no longer be valid, see note above.]

In response to concerns about unqualified, unlicensed individuals operating as paid tax preparers and advisors referred to by the IRS as "Unenrolled Preparers), the IRS created a new designation: Registered Tax Return Preparer (RTRP).

While these individuals are required to pass a exam it is quite simple compared to the EA, CPA or Bar exams.  The annual continuing education requirements are of course less stringent as well.

SUPERVISED TAX PREPARERS              (No right to practice)

[This section may no longer be valid, see note above.]

At the bottom of the hierarchy are Supervised Tax Preparers. These individuals are allowed to prepare, or assist in the preparation of, all or substantially all of a tax return  as long as they are supervised by a licensed practitioner (EA, CPA or attorney) and that supervisor signs the return.  There is no education or examination requirements to be a Supervised Tax Preparer.  If you're over 18 and breathing you will probably qualify. 

Supervised Tax Preparers may not sign any return they prepare or assist in preparing, nor may the represent taxpayers before the IRS in any capacity whatsoever.

COOKE & COMPANY DOES NOT EMPLOY "SUPERVISED TAX PREPARERS". ALL OF OUR TAX PREPARERS AND ADVISORS ARE LICENSED TAX PRACTITIONERS.

What is an National Tax Practice Institute Fellow?

The National Tax Practice Instutute is a formal three-year tiered curriculum designed to enhance a tax practitioner's skills in representing tax clients. This rigorous program is only open to Enrolled Agents, Attorneys and CPAs. As the National Association of Enrolled Agents states, "Fellows are the crème de la crème of representation experts, and are highly qualified to represent their clients."

When it comes to choosing a tax practitioner, keep in mind that there are widely varying levels of expertise. A "Registered Tax Return Preparer" (RTRP) can assist you with providing rudimentary tax advice and preparation. On the other end of the spectrum, an NTPI Fellow possesses the highest degree of relevant tax knowledge and expertise, and is best equipped for client representation.

The successful resolution of tax matters is often contingent upon your representative's ability to navigate through complicated agency structure, and upon their knowledge of Internal Revenue Code, other laws, and IRS & Treasury Department regulations. When choosing a tax advisor, representative, or preparer, consider your personal situation and choose your preparer with care to assure peace-of-mind. An NTPI Fellow can ensure that you receive the best representation possible before all administraitve levels of the IRS.

where not to get tax advice

A. ANYONE WITH A DOG IN THE FIGHT

Be suspicious of any tax advice offered by someone who has a financial interest in the matter.

Some multi-level marketing (MLM) promoters have been known to offer really atrocious tax advice in order to make the "business opportunity" they are trying to get you to join seem lucrative. Use a little common sense, do you really think you can deduct your everyday business clothes just because you happen to deliver some cosmetics to a friend during the day? Get real.

Also be wary of anyone who gets a commission from selling you a product, such as an Insurance Agent or Financial Advisor. While some are very good and conduct themselves with integrity, others may put their own commission ahead of your best interests.

B. UNLICENSED "PROFESSIONALS"

As noted to the left, there are only three types of tax licensed tax practitioners (EAs, CPAs, and Attorneys). Ask yourself, if someone claims to be a "tax professional" why haven't they bothered to study, pass a rigorous exam, undergo a background check and commit to keeping their tax knowledge up to date through many hours continuing education eeach year?  The most likely answer is "they can't". Think about it; then make your choice.

Beware: There is at least one self-described "tax professional" here in The Woodlands area who for several years now has claimed to be "upgrading to Enrolled Agent". Well folks, either you are an EA or you aren't one. He isn't one. Do you really want to be getting your tax advice from a "wanna be"?

C. CO-WORKERS

Well-meaning co-workers may in good faith pass along bad tax advice that they have received. Just because someone has "gotten away with" something for years doesn't mean you will or should. 

Classic examples include firemen and police officers who get duped into deducting all their meals.  Yes there is the famous "Christie vs. United States" case, but it doesn't apply to most officers and the IRS routinely fights these cases. 

D. WEB FORUMS

Pick a topic, any topic, there's a web forum out there where you can discuss it. Unforunately they are a rich source of misinformation. Some people have even been known to post deliberately misleading items "just for fun".