TAX PREPARERS AND INTERVIEWERS Number 482 Interest Area 7 1998
THE JOB
TAX PREPARERS and INTERVIEWERS prepare tax returns for others for a fee. Their job is to accurately fill out all the required forms and to use all appropriate adjustments, deductions, and credits to keep their clients' taxes to a minimum. Those who are self-employed are classified as Tax Preparers, while those employed by tax services are called Tax Interviewers.
Tax Preparers and Interviewers are registered by the California Department of Consumer Affairs. There is another group of tax practitioners, enrolled agents, who are licensed by the Internal Revenue Service (IRS). In addition to preparing federal and State tax returns for individuals and businesses, enrolled agents are legally entitled to represent any taxpayer in any type of audit before the IRS or the State Franchise Tax Board. This guide does not cover certified public accountants (CPAs) or attorneys, although these professionals also prepare tax returns and represent taxpayers in audits.
Tax Preparers and Interviewers gather information by interviewing clients and by using copies of previous tax returns, wage statements from employers, year-end interest and dividend summaries, and other tax records. Clients are asked about their work, their investments, their expenses, and any unusual or significant events of the previous year, such as a new job, retirement, home improvements, or capital losses or gains. In this way, preparers pick up clues to possible deductions and credits and then follow up with additional questions to obtain the necessary details.
Tax Preparers often try to complete the entire return at the interview, but complex returns may require additional work. Some preparers fill out detailed data sheets instead of the actual returns, which are processed later by computer (generally by an outside service). In these cases, after interviewing the client and gathering the data, most experienced preparers can give clients a rough idea of what their return will look like. They usually calculate the client's fee at this time.
Some preparers in larger firms check the returns of other preparers, and do not deal directly with clients. By law, preparers must sign every return they complete, enter their social security number or federal identification number, and retain a copy of the return.
Some Tax Preparers also do tax planning with their clients, help their clients respond to notices from the State and federal tax agencies, and advise them about payment and collection problems. They may assist clients when they are audited, help them set up estimated tax payments or correct withholding from wages, and advise them about record-keeping for tax purposes.
In addition, Tax Preparers and Interviewers keep their clients informed of the current interpretation of tax laws and the effect of new tax legislation.
WORKING CONDITIONS
The work of Tax Preparers and Interviewers is usually seasonal, with many offices open only during tax season, January through April. However, many enrolled agents work year-round doing tax and estate planning and audits. Preparing tax returns can be a very demanding job involving close concentration and considerable time pressure, particularly toward the end of the tax season.
Many people working as Tax Preparers and Interviewers have other careers; some are college students or retirees. Only a few preparers do tax-related work year-round, preparing late or amended returns.
EMPLOYMENT OUTLOOK
The following information is from the California Projections of Employment published by the Labor Market Information Division.
Estimated number of workers in 1993 10,890 Estimated number of workers in 2005 15,180 Projected Growth 1993-2005 39% Estimated openings due to separations by 2005 2,660
(These figures do not include self-employment or openings due to turnover.)
The number of Tax Preparers is expected to grow faster than average through 2005. Faced with complex and constantly changing tax regulations and the time-consuming paperwork involved in preparing even simple tax returns, more and more people are turning to Tax Preparers for help.
As of early 1998, there were approximately 28,400 Tax Preparers and Interviewers with active registration with the California Department of Consumer Affairs.
WAGES, HOURS, AND FRINGE BENEFITS
Self-employed Tax Preparers and Interviewers charge their customers fees, typically based on either the number of schedules used or time spent preparing the returns. In businesses employing interviewers, workers usually earn straight commission. Earnings vary with the individual's qualifications and length of service. Until their commissions are calculated, preparers are paid an hourly draw, ranging from minimum wage to about $8.00 an hour. Total earnings vary widely, from the minimum wage to $30.00 an hour or more depending on commission rate, individual productivity, and the volume of work in the office. A few preparers (including checkers) are paid straight wages, ranging from $6.50 to $12.50 an hour.
Tax services are normally open seven days a week, 12 hours a day during tax season. Work schedules vary, with preparers working 12 to 40 hours a week or more.
ENTRANCE REQUIREMENTS AND TRAINING
State law requires persons preparing tax returns for a fee to be registered. Basic qualifications for registration are the same for preparers and interviewers. Some preparers are exempt from State registration because they are regulated by other agencies. These include enrolled agents, CPAs, attorneys, and Tax Preparers employed by banks, savings and loans, or loan companies that operate tax preparation services.
Applicants for State registration must be at least 18 years old, with a high school diploma or the equivalent. They must have had either 60 in-class hours of approved instruction in basic personal income tax law, theory, and practice, or two years of equivalent work experience preparing personal income tax returns, covering both California and federal taxes. They must also post a $5,000 surety bond. Because many community and four-year colleges only cover federal taxation, students must take additional instruction in State tax laws.
In order to be registered on the basis of work experience, applicants must have worked full-time for two tax seasons or part-time for four tax seasons, preparing both federal and State returns. Registration with the State of California must be renewed annually. Renewal requires the completion of 20 hours of continuing education, with eight hours in federal and four hours in State taxation. Some tax services offer instructional courses to help their employees become registered.
Most employers look for the same qualities in applicants; these include good arithmetic and language skills, legible handwriting, the ability to concentrate on details and to do fast, accurate work, even under pressure. Equally important (except perhaps for checkers), are an even-tempered, friendly manner, and the ability to relate to all kinds of people. In some locations, working knowledge of a foreign language is a plus.
ADVANCEMENT
Tax Preparers and Interviewers can become enrolled agents. There are two ways to meet the requirements to become enrolled agents: five years of previous IRS employment at the auditor level or higher; or successful completion of a four-part, two-day written examination conducted annually by the IRS. There are no educational or experiential requirements for taking the enrolled agent examination; however, candidates should be able to answer income tax accounting questions at the intermediate college course level. Applications, as well as free study materials for the exam, are available at local IRS offices. Candidates will also benefit from taking the exam preparation seminars and classes offered by the California Society of Enrolled Agents (CSEA). Enrolled agent must meet the continuing education requirements of at least 72 hours every three years.
Enrolled agents may become members of the National Association of enrolled agents and its California affiliate, CSEA, which has chapters Statewide.
FINDING THE JOB
Tax preparers are usually hired in December for the following tax season. Jobs may be found by calling employers or through tax preparation schools. Qualified college students should contact their campus placement office where employers may place job orders. Job seekers may also register with the California Employment Development Department. The California Society of Enrolled Agent's monthly newsletter is another source for job leads.
ADDITIONAL SOURCES OF INFORMATION
California Tax Education Council P.O. Box 2890 Sacramento, CA 95812-2890 (916) 492-0457
California Society of Enrolled Agents (CSEA) 3200 Ramos Circle Sacramento, CA 95827 (916) 366-6646
RELATED OCCUPATIONAL GUIDES
Accountants No. 1 Bookkeeping, Accounting, & Auditing Clerks No. 26
OCCUPATIONAL CODE REFERENCES
DOT (Dictionary of Occupational Titles, 4th Ed., 1991) Tax Preparer 219.362-070
OES (Occupational Employment Statistics) System Tax Interviewers and Preparers 211110
Source: State of California, Employment Development Department,
Labor Market Information Division, Information Services Group,
(916) 262-2162.
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