The laws in the state of California dictate that any person who, for money or consideration, assists another individual in preparing their taxes or who assumes such absolute responsibility must be registered as a certified tax preparer.
State regulations have endorsed the California Tax Education Council (CTEC) as an institution for competent tax instruction. Tax preparers in California are generally CPAs, attorneys members of the state bar, enrolled agents, and sometimes bank agents.
How to become a certified tax preparer in California?
The California Tax Education Council (CTEC) is a private, not-for-profit institution with public benefits. This organization is mandated by the state and is responsible for providing lists of tax education providers and tax preparers to comply with its requirements.
After CPAs, tax preparers are the most competent professionals to take on this job in California. The profession is booming, and you need to follow several steps to be part of the profession.
To become a tax preparer, you must complete these steps:
- Take a 60-hour course taught by this entity within the last 18 months
- Purchase a five thousand dollar tax preparer bond from an insurance agent
- Obtain a preparer tax identification number (PTIN) from the Internal Revenue Service (IRS)
- Scan approved lives
- Register and pay the $33 registration fee online at this link https://www.ctec.org/tax-professionals
Annual renewal of the certificate
To work as a tax preparer in California, you must renew your certification annually. This renewal is done before the CTEC, and you must meet these requirements:
- Take a minimum of 20 hours of classes to update your knowledge as a certified preparer. This requirement must meet the following conditions:
- Ten hours of federal tax law
- Three hours of federal tax refresher
- Two hours of Ethics
- Five hours of California tax law
- PTIN renewal each year
- Maintain a $5,000 tax preparer’s bond
- Renewal registration and payment of the annual registration fee of $33 by October 31 each year. If paid between November 1 and January 15, the rate is $55
When a preparer fails to comply with these requirements by January 15, the certificate will be considered expired, new requirements must be met, and financial penalties for failure to follow instructions.
Penalties for unregistered tax preparers
The Franchise Tax Board (FTB) can sanction tax preparers in California who fail to register or comply with the established rules. The penalties imposed by the entity are as follows:
- For the first failure to register, they must pay $2,500
- Upon the second failure to register, they must pay $5,000
The interested party has 90 days to comply with the regulation after receiving the first notice with the fine of $2,500 for any failure to register with the CTEC or work without being registered. If the person involved can demonstrate with evidence that the accusations are unjustified, the sanction is withdrawn.
Fraudulent tax preparers
Some people insist on working as a tax preparer without registering with CTEC or complying with the rules defined by California. The law states that the preparer must sign their name and surname on the documents. They work under fraudulent modalities if:
- Sign with a company name
- They affix a commercial label to the return
- They “forget” the signature
California has also set up a channel for citizens to report individuals who work as tax preparers without a license or perform fraudulent work. Call these numbers and file a complaint:
- California Registered Tax Preparer
- (877) 850-2832
- Certified Public Accountant
- (916) 263-3680
- (866) 442-2529
- Enrolled Agents
- (877) 850-2832
To better help understand how to become a tax preparer, here are frequently asked questions (FAQ) on the subject:
Do tax preparers need a license in California?
Although California does not issue a certificate technically, some people mistakingly call it a “license” or CTEC Certificate”; the reality is that no document is given; registration is made with the CTEC.
If you are looking for a license, the truth is that you need to learn how to register with the CTEC to work as a tax preparer.
Is it hard to be a tax preparer?
No. Being a tax preparer is not hard work. In principle, the procedure to become one is easy. Above we explain the requirements and, secondly, it is a seasonal job. That is to say. It is not an activity that will keep you busy during the whole year but rather seasonally.
How much does a tax preparer cost in California?
According to Accounting Today, the average cost of a tax preparer in California is $221 and $400. The fee will depend on the complexity of the tax.
The amount also varies depending on the location of the professional. In Sacramento, for example, the price ranges from $150 to $850, and the average is $325.
For years I have studied American finance regulations. All the information in this blog is sourced from official or contrasted sources from reliable sites.
Salesforce Certified SALES & SERVICE Cloud Consultant in February 2020, Salesforce Certified Administrator (ADM-201), and Master degree in “Business Analytics & Big Data Strategy” with more than 13 years of experience in IT consulting.