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Small bookkeeping Tax business advice

I have been operating a very small bookkeeping tax return preparation business out of my home for the past 20 years. I file my business on Schedule C. I have an inactive CPA license from the state I lived in over 20 years ago. I do not operate under a CPA title or use it in anyway, as I shouldn't being inactive and all. I am not required by CA to do any continuing education etc. to keep it in the inactive state. I do however attend yearly state and federal update seminars. I have been approved by the IRS for years to participate as an Authorized IRS E-file provider. I have always told clients that I could help them with any IRS issues but could not represent them before the IRS. In 20 years I have never had the need to do anything but help gather documents and information to substantiate a line item in question. Here are my concerns, and you may pose others:

- IRS Circular 230 seems to say that "Practice before the IRS" includes preparing and filing documents. As such it seems I should be either an attorney, CPA, enrolled agent, or and enrolled actuary. It would seem, the inactive license wouldn't qualify. Is it possible I should be taking steps to become an Enrolled agent? Do you see the possible problem here? - I also am concerned about PSC being a required form of business for bookkeepers. Is this the case too?

I would really appreciate any guidance possible. I have the fear that the 200+ very basic tax returns I file yearly could have been done without the proper authority to do so.

Thanks, Michael

Reply to
SMF
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That's not my understanding. CTEC (Calif. Tax Educ. Council) registers paid preparers and specifically exempts "(a) A person with a current and valid license issued by the California Board of Accountancy and his or her employees while functioning within the scope of their employment." Other than similar exemptions for EA's and current attorneys, I think you have to be registered to avoid penalties.

[...]

They don't mean helping a taxpayer file ordinary individual tax returns, they mean filing other documents on behalf of a taxpayer, typically in an audit situation. So, to prepare tax returns for pay requires no special blessing from the IRS.

Being a CPA does not preclude also being an EA, or a California (CTEC) Registered Tax Preparer (CRTP). Clients can "look you up" online at

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if you are registered, kind of like looking up a construction contractor to see if they are licenesed (but CTEC does not issue licenses!).

There may or may not be a potential CTEC penalty, which may or may not be enforced for prior years. ;-)

Incidentally, there is actually a blog

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on the official CTEC web site, which I find both useful in content and surprising for a government-sponsored agency.

-Mark Bole

Reply to
Mark Bole

There have been changes to circular 230 and its going in the direction you pointed out. So, I think becoming an EA might be something you want to pursue. Being a CPA, not an EA, I am not familiar with the cpe requirements for the EA. However, I do suspect that they are likely similar to being a CPA.

Why not re-activate your CPA license & do the cpe? I personally find much of the cpe to be professionally beneficial.

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-----> real address on hobokeni or hobokenx

Reply to
Benjamin Yazersky CPA

72 hours of CPE every three years, minimum of 16 per year, must include two hours of Ethics per year.
Reply to
Don Priebe

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