Preparer definition

For the free returns you do for family members (or friends and neighbors), no need to sign.

For your boss, perhaps a little more problematic. Is your boss a sole proprietor (or disregarded SMLLC)? Then I think you're OK doing his return without signing, as an employee. But if your employer is a corporation or partnership, and you are doing individual returns for other employees (your boss) on company time, then I think you probably should be signing, but I haven't studied the regs in detail to determine this.

I'd recommend you either sign the returns as paid preparer (and register your PTIN with the IRS), or stop doing them. In the former case, you might also want to establish a dollar amount of your pay that corresponds to the return preparation fee. Conversely, your boss now also has additional taxable compensation from the company (in the form of an employee fringe benefit).

You might compare this to what the national storefront tax prep chains do, for example. When free tax return prep is offered to the front desk employees as a perk of the job, the tax pro employee who prepares it must sign, and the recipient gets taxable compensation added into box 1 of the W-2.

-Mark Bole

I don't agree with your different handle of Schedule C bosses versus form 1120 bosses. Seems to violate the form over substance principle. Seems the return should be signed in both cases, and money officially charged in both cases (not just the 1120 case).

There is now a cost to register a PTIN. I think it's around $60 a year.

I can't think of a good reason why an employee who prepares a tax return for his employer would not be a "paid preparer."

Currently $50.00 for the IRS plus $14.25 for the Third Party Administrator.

Treas Reg 301.7701-15(f)(1)(ix):

"The following persons are not tax return preparers: [...] An individual preparing a return or claim for refund of a taxpayer, or an officer, a general partner, member, shareholder, or employee of a taxpayer, by whom the individual is regularly and continuously employed or compensated or in which the individual is a general partner."

So, maybe he's not a return preparer for his boss after all, regardless of the type of entity he works for. But for the relatives of the boss, I think he still is.

-Mark Bole

OK - you've convinced me.

Meaning either sign for both, or not sign for both Schedule C and employees and corporation employees.

This regulation does not make sense to me. So if my boss has 2 businesses, and a files a 1040 with 2 Schedule C's, and a I work for one of those businesses, then I'm not a not a paid tax preparer? I think the regulation only allows the ability of me to prepare the Schedule C or 1120 for the business that I work in without signing, but if I prepare other Schedule C's, or the personal Schedule A/B/D/M/

6251/etc then those forms must be signed. (Of course, Schedule C has no space for a signature, but that's besides the point.)

Schedule C relates to the business activity of a sole proprietor. You can't work for a fictitious entity, only for the sole proprietor doing business as the fictitious entity. Even, if he has multiple DBAs, you still work for him.

I think the idea is that if an employee of a company does that company's tax return, it's considered the company doing its own return. So if there are two businesses owned by the same person, and you are employed by one, you would be considered a preparer for that other return.

Keep in mind that the employee of a corporation is not the employee of the person who owns the corporation. A corporate employee completing the corporation's return is not a preparer. A corporate employee completing the corporation's owner's tax return is likely to be classified as a preparer.

That's the recollection I based my original reply on, but the reg. seems to indicate an employee can prepare for several others (stockholders, other employees) associated with the firm and still not be a "tax preparer".

-Mark Bole

...But not a PAID preparer, unless the owner pays the corporation.

... by virtue of having taxable fringe benefit compensation added to W-2 Box 1, which is then considered to be paid for the tax prep....

In other words, the recipient of this employer-provided tax prep will probably have taxable fringe benefit, no matter what.

-Mark Bole

And if the tax preparer does all the corporation's 1099-DIVs?

I don't understand the question? The employee who prepares the information returns is being paid, and the company is deducting that labor expense.

-Mark Bole

I would think the corporate employee who prepares 1099-DIVs for all shareholders including the company CEO whould still not be classified a tax return preparer.

He's not paid BY THE TAXPAYER whose return he's doing... (directly or indirectly).