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I was helping a friend filling the tax forms the other day, and he offered to pay for my time helping him. I know that it is illegal to be paid for tax preparation without a California license and IRS certification, so I declined, but it made me thinking. I looked around for the requirements and they're fairly simple - tax course in a community college once a year, pay some, pass a test and get a liability insurance.

But the IRS requirements also mention "Tax Compliance Check", and there's not much I could find on what that check is. Is it true to conclude that becoming a paid tax preparer will automatically trigger audits on my returns?

littleadv
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2 Answers2

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From the Treasury Department Circular 230 which was referenced on the page Enrolled agent Information

(d) Compliance and suitability checks.

(1) As a condition to consideration of an application, the Internal Revenue Service may conduct a Federal tax compliance check and suitability check. The tax compliance check will be limited to an inquiry regarding whether an applicant has filed all required individual or business tax returns and whether the applicant has failed to pay, or make proper arrangements with the Internal Revenue Service for payment of, any Federal tax debts. The suitability check will be limited to an inquiry regarding whether an applicant has engaged in any conduct that would justify suspension or disbarment of any practitioner under the provisions of this part on the date the application is submitted, including whether the applicant has engaged in disreputable conduct as defined in §10.51. The application will be denied only if the results of the compliance or suitability check are sufficient to establish that the practitioner engaged in conduct subject to sanctions under §§10.51 and 10.52.

mhoran_psprep
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Tax preparers are audited, you will not fly under the radar.

The IRS has over 2000 estate lawyers actively looking for something out of line.

The IRS publishes litigation (including fines, penalties and imprisonment) on their website

Someone else can elaborate on how much of your time this can take. So I don't know the frequency of the tax compliance check

CQM
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