A Guide for California Tax Preparers

A-Guide-for-California-Tax-Preparers

Updated 1/10/2022

California is among five states that extensively regulate tax preparers by implementing registration (as opposed to licensing or certification) requirements, including getting bonded and taking courses. A tax preparer in California is someone who assists with or prepares a state or federal income tax return for a fee. All California Registered Tax Preparers (CRTP) must abide by these regulations, and it all starts with registering with the California Tax Education Council (CTEC). California Registered Tax Preparers are required to renew their registration with the CTEC annually for as long as they wish to continue preparing income tax returns. 

There are several groups who are exempt from these additional regulations, including California Certified Public Accountants (CPAs), Enrolled Agents (EAs), attorneys who are members of the California State Bar, and other specified banking or trust officials.

Take a 60-hour education course, get $5,000 surety bond, PTIN, pass a background check, submit an application and $33 fee.

How do you become a registered tax preparer in California?

CRTPs must complete the following tasks prior to becoming registered:

  • Take a 60-hour course (45 hours federal and 15 hours state) from a CTEC-approved qualifying education provider within the past 18 months.

  • Obtain a $5,000 California tax preparer surety bond.

    • With the passage of Senate Bill 1307, tax preparers may acquire their bond prior to completing the tax course, as long as they get the bond before registering with CTEC.

  • Acquire a Preparer Tax Identification Number (PTIN) from the Internal Revenue Service (IRS).

    • As of 2021, the IRS has a $21 fee per PTIN application or renewal (plus a $14.95 fee payable to a contractor).

  • Pass a criminal background check and submit fingerprint images to CTEC (not applicable to tax preparers who were registered prior to 2020).

  • Submit an online application, along with a $33 registration fee.

    • Print, fill out, and mail the application to CTEC or complete online.

California tax preparers are responsible for completing the registration requirement, even if the employer is providing or paying for the surety bond and CTEC registration. All unregistered tax preparers will be personally accountable for any penalties they may face.

In general, CPAs, attorneys, Enrolled Agents, and anyone employed by these individuals are exempt from going through this CTEC registration and licensing process.

What is required for renewing CTEC registration?

Once a tax preparer registers with CTEC, he or she must renew this registration each year by fulfilling the following requirements:

  1. Take a minimum of 20 hours of continued education from a CTEC-approved provider (10 hours of federal tax law topics, three hours of tax law updates, two hours of ethics, and five hours of state).

  2. Ensure a $5,000 tax preparer surety bond remains in effect.

  3. Renew your PTIN number with the IRS.

  4. Renew registration through CTEC and submit the renewal application, along with the $33 annual registration fee.

Renewal registration begins August 1 and ends October 31. All CTEC-registered tax preparers who fail to renew their registration before October 31 must renew during the late registration period, which begins November 1 and ends January 15. The late registration fee is $55 (plus the $33 registration fee). Registration renewal is not optional. Individuals in California who prepare taxes for a fee must renew their registration for their surety bond to remain valid. If a CRTP fails to renew by January 15, their CTEC registration will be considered expired. They will have to undergo all of the requirements once again, such as retaking the 60-hour education course, passing a final exam from an approved education provider, undergoing a background check and submitting fingerprint images (starting 2020), and paying all applicable fees.

An individual who holds a minimum of two current years of experience in preparing personal income tax returns may be exempt from going through the continued education requirement. These individuals may send a petition to CTEC, who will determine if their experience is equivalent to the required education. If the education and experience match, these individuals may receive a certificate of completion.

What is the California Tax Education Council (CTEC)?

CTEC is a California nonprofit corporation that approves tax schools and registers tax preparers. The organization was established by the California State Legislature to promote adept tax preparation within the State of California. CTEC is the second largest division of tax preparation professionals in California, following Certified Public Accountants (CPAs).

With the passage of Assembly Bill 3143, some changes were brought about for both CTEC and California Tax Preparers.

As of 2019:

  • CRTPs must provide the CTEC website to clients in writing prior to rendering tax preparation services.

  • The CTEC will post on its website all disciplinary actions taken against registrants by the council, as well as a list of registrants on probation.

  • CTRPs are required to post all paid claims against their surety bond to CTEC.

  • CTEC is required to post a notice of the paid surety bond claims on ctec.org.

The purpose of this bill is to increase the protection of taxpayers by adding more responsibilities for CTEC and registered California tax preparers.

How does California differ from other states regarding regulation of tax preparers?

In addition to California, the four other states that regulate tax preparers are Maryland, New York, Oregon, and Connecticut. Minnesota and Illinois have also implemented a few regulations for tax preparers, but they are not as in-depth as the other states mentioned.

  • Maryland imposes the mandatory education requirement and requires preparers to register after passing a state or IRS exam or bring proof of considerable experience preparing tax returns. Additionally, Maryland authorizes the state attorney general to obtain injunctive relief in the event a tax preparer does not abide by state requirements.

  • New York has annual registration and continuing education requirements for its tax preparers.

  • Oregon tax practitioners and consultants must pass a state exam with a score of at least a 75% and complete 30 hours of continuing education in order to maintain their license.

  • Connecticut imposed increased regulation for tax preparers starting in October 2017. The state borrows components from the other existing states with regulatory procedures.

  • Minnesota developed standards of conduct for tax preparers.

  • Illinois recently initiated PTINs to identify fraudulent tax preparers.

Need more a California tax preparer surety bond?

At SuretyBonds.com, California tax preparer bonds cost $25 for one year of coverage, $55 for two years, $70 for three years, and $80 for four years. We make it easy when it comes time for renewal.

If you need more information about surety bonds for California tax preparers, you are in luck! Give our office a call at 1 (800) 308-4358 and one of our surety experts will gladly answer any of your questions. If you’re ready to purchase your bond, our secure online bond checkout allows you to get bonded as a tax preparer in just a few minutes.

Visit the CTEC website for tax professionals for more information. Watch this video for another look inside the bonding process.

About the Author

Megan Linberger
Megan is a 2019 graduate of the University of Missouri-Columbia with a Bachelors of Journalism (Strategic Communications) and a minor in Art. She is the graphic designer on the marketing team of SuretyBonds.com, which is the leading provider of online bonding for clients nationwide.