IRS preparer registration rules for doing a return for free for non-relatives?

I know all paid preparers now have to register, take a test, classes, etc.

But what about someone who does a few returns for free for non-relatives?

Situation:

I am a TaxAide volunteer. I am *not* a professional tax preparer. The only returns I do are my own, my mother's, and the returns I do for TaxAide. However, due to my own situation I know very well how to handle ongoing residential rental real estate including handling depreciation (though I would never attempt to deal with a sale of it).

For years I have done several returns each year with residential real estate on them as part of my TaxAide work (our site is in an area where there are lots of (literal) little old ladies who subsist on social security and maybe a bit of bank interest and live in one floor of the two- or three-story house they own and rent out the other floor(s)). However, AARP/IRS is cracking down hard on the "out of scope" rules and the word has come down that we have to tell these long-time "clients" that they'll have to go elsewhere.

These are people for whom having to pay several hundred dollars to get their return done is a non-trivial expense.

I am willing to do their returns *for free* (heck, I've been doing them for free for years already) off-site. I would refuse to sign the returns (just like I don't sign them as an official TaxAide volunteer).

I do understand that by doing so (and for that matter by doing something out-of-scope of the TaxAide program) I forfeit the liability exemption I have when doing in-scope stuff as part of the program.

So what I'd like to know is if doing free returns like this for non-family members outside of an official volunteer program is legal or not?

-- Lagrangian Mechanic

Yes, it's legal, as long as you don't accept any kind of compensation. You don't have to register, take a test, or take continuing education. And it doesn't seem to violate the Volunteer Standards of Conduct, as far as I can see.

I would not take the liability issue lightly, though. As you mentioned, you would be personally liable for the correctness of the returns. Any one of these people could sue you if something goes wrong, and probably win. They could be encouraged to sue by any relative or friend who thinks you took advantage of them or did something wrong.

I would also be concerned that they would still see you as the Tax-Aide person. You should make it very clear to them, probably in writing as well as verbally, that this is not a Tax-Aide service, AARP Tax-Aide is not involved in any way, etc. You should probably talk to your site coordinator about it, too, before you do anything.

I understand your motivation and your concern for these people, but it's a very sticky situation and you should proceed with great caution.

Bob Sandler AARP Tax-Aide TCE Volunteer and RTRP