Becoming A Tax Specialist: Understanding Arizona Law

If you're looking to become a tax specialist in Arizona, there are a few key steps you need to take. Firstly, it's important to note that while there are no standardized prerequisites, having a strong foundation in tax knowledge is essential. This can be gained through reputable tax preparation certificate programs or a bachelor's degree in a relevant field such as accounting, finance, or business administration. Additionally, you must obtain a Preparer Tax Identification Number (PTIN) from the IRS, which is required for all paid tax preparers. In Arizona, there is also the option to pursue voluntary licensing, such as the Licensed Tax Preparer (LTP) credential. For those seeking to specialize in tax law, becoming a certified legal specialist involves additional requirements, including being admitted to the practice of law for at least 5 years and having substantial involvement in the field of tax law.

Tax law education

While there are no standardized prerequisites to become an Arizona tax preparer, foundational knowledge in tax law is essential. This can be achieved through a variety of educational paths, including certificate programs, bachelor's degrees, and ongoing professional development.

Certificate Programs

Reputable tax preparation certificate programs, such as the 130-hour Registered Tax Return Preparer (RTRP) course, provide learners with practical tax knowledge. These programs cover topics such as tax code and form overview, filing processes, income/deductions, and ethics. They can be completed in 1-6 months online or in-class and typically cost between $200 and $1000. Community colleges also offer similar tax prep qualifications.

Bachelor's Degree

Although not compulsory, a bachelor's degree in accounting, finance, or business administration reinforces understanding of tax laws and demonstrates dedication for those seeking senior preparer or advisory roles.

Ongoing Professional Development

Even seasoned tax preparers need to stay updated with the latest tax law changes and reforms. Continuous professional development can be achieved through CPD courses, professional body resources, and refresher workshops.

Licensing and Certifications

While there is no universal license for tax preparers in Arizona, certain certifications add credibility and eligibility for more complex tax filings. The IRS requires all paid tax preparers to have a Preparer Tax Identification Number (PTIN), which must be renewed annually. Additionally, Arizona offers voluntary licensing options like the Licensed Tax Preparer (LTP) credential for preparers without CPAs. Candidates for the LTP must pass approved exams, prove tax preparation experience, and undertake ongoing development.

For those seeking to become tax law specialists, the State Bar of Arizona offers board certification. To be eligible, one must have been admitted to practice law for at least 5 years, with at least the last 2 years in Arizona, and have a minimum of 500 hours of practice in tax law. Additionally, substantial involvement in the field of tax law in at least 4 of the last 6 years is required.

Tax specialist credentials

To become a tax specialist in Arizona, you must obtain a Preparer Tax Identification Number (PTIN) from the IRS. This is a mandatory requirement for all paid tax preparers in the United States. The PTIN must be included on every tax return that the preparer fills out. There is no fee for the initial registration or renewal of a PTIN, and it can be obtained through the IRS website.

In addition to the PTIN, tax specialists in Arizona can pursue further credentials and qualifications to enhance their career prospects and provide specialised services. Here are some of the common credentials for tax specialists:

• Enrolled Agent (EA): Administered by the IRS, the Enrolled Agent certification involves extensive testing across all aspects of taxation. It demonstrates specialised knowledge and expertise in tax preparation, especially for intricate tax situations. Enrolled Agents are licensed by the IRS and must pass a three-part Special Enrollment Examination. They are also required to complete 72 hours of continuing education every three years to maintain their active status.
• Certified Public Accountant (CPA): CPAs are licensed by state boards of accountancy, the District of Columbia, and U.S. territories. They have passed the Uniform CPA Examination and completed a study in accounting at an accredited college or university. CPAs must also meet experience and good character requirements, comply with ethical standards, and undertake continuing education to maintain their license. Some CPAs specialise in tax preparation and planning, offering a range of services to their clients.
• Attorney: Attorneys are licensed by state courts, the District of Columbia, or their designees, such as the state bar. They typically have a law degree and have passed a bar exam. Attorneys often have ongoing continuing education and professional character standards. Similar to CPAs, some attorneys may choose to specialise in tax preparation and planning, offering a diverse range of legal and tax-related services.
• Licensed Tax Preparer (LTP): In Arizona, the Licensed Tax Preparer credential is offered by the Arizona State Board of Technical Registration for preparers who do not have a CPA. Candidates for the LTP must pass approved exams, demonstrate tax preparation experience, and commit to ongoing professional development.

It is important to note that while these credentials enhance the knowledge and expertise of tax specialists, the specific requirements and regulations may vary across different states. Tax specialists are advised to consult official sources and stay updated with any changes in tax laws and credentials.

Tax preparation software

The Arizona Modernized e-File (MeF) system is a web-based platform that allows for the electronic filing of individual income tax, fiduciary income tax, corporate income tax, and partnership returns through the IRS MeF Program. The system uses the widely accepted Extensible Markup Language (XML) format, which enables automatic data transmissions and confirmations to EROs. Another electronic filing platform is TPTFile, which also uses the XML format and enables automatic data transmissions and message retrieval.

When selecting a tax preparer, it is important to ensure they have the appropriate credentials and are reputable. While most tax return preparers provide outstanding and professional services, some taxpayers are scammed by dishonest preparers. To avoid this, taxpayers should verify that the preparer has an IRS Preparer Tax Identification Number (PTIN) and is registered with the IRS. It is also recommended to check their reviews and history, inquire about costs and service fees, and ensure the preparer offers e-filing.

Taxpayers should also be aware of their responsibilities when working with a tax preparer. They should understand their tax return, review the routing and bank account information, and ask the preparer to sign the return and list their PTIN. Taxpayers are ultimately responsible for the accuracy of their tax return, even if it is prepared by a professional.

Tax law specialisation

To become a tax law specialist in Arizona, you must first be admitted to the practice of law for at least 5 years, with at least the last 2 of those years in the State of Arizona. Your annual basis of practice must be equivalent to at least 50% of a full-time practice, and you must have a minimum of 500 hours of practice in the area of tax law.

Your experience in the field of Tax Law will be measured by your substantial involvement in at least 4 of the last 6 years. This could include providing advice on the tax consequences of transactions such as the formation, operation, liquidation, and reorganization of business organizations, as well as personal transactions and arrangements. It could also include advising on and establishing employee benefit plans, or representing clients in connection with civil or criminal tax controversies or liabilities. Teaching Tax Law at an American Bar Association-accredited law school is also considered valid experience.

To achieve this specialization, you must combine your experience with high ethical standards, excellent peer reviews, specialized tax legal education, and tested knowledge.

The State Bar of Arizona independently verifies that Tax Law Certified Specialists have advanced knowledge of tax-related legal issues. This includes understanding the tax consequences related to personal transactions and the formation, operation, liquidation, and reorganization of businesses, as well as representation in civil or criminal tax controversies or liabilities.

Choosing a Tax Law Specialist

When choosing a tax law specialist, it is important to select a reputable and qualified professional. Taxpayers are ultimately responsible for the accuracy of their tax return, regardless of who prepares it. While most tax return preparers provide outstanding and professional services, some taxpayers are scammed because they choose the wrong preparer.

To avoid this, you can check the credentials of potential tax preparers. The IRS provides a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications in your area. Additionally, many tax preparers belong to professional organizations.

It is also important to verify the reputation of the preparer and seek assistance through organizations like AARP Foundation Tax-Aide, Volunteer Income Tax Assistance (VITA), or 211 Information. Checking reviews and history can also provide valuable information about their performance and business practices.

Tax Preparer Requirements

While there are no standardized prerequisites to become a tax preparer in Arizona, foundational education is important for providing essential knowledge and credibility to clients. Reputable tax prep certificate programs, like the 130-hour Registered Tax Return Preparer (RTRP) course, equip learners with practical tax knowledge. This includes an overview of tax codes and forms, filing processes and timelines, income/deductions and adjustments, and ethics and best practices. These programs can be completed in 1-6 months online or in-class and cost $200-$1000+.

Although not compulsory, a relevant bachelor's degree in accounting, finance, or business administration can also be beneficial for understanding the tax environment and demonstrating dedication for those seeking senior preparer or advisory roles.

Regardless of their educational background, all paid tax preparers in Arizona must have a Preparer Tax Identification Number (PTIN) issued by the IRS. This requires an initial $35 application fee and $35 annual renewals, which are managed online through the IRS PTIN system.

In addition to the universal PTIN requirement, Arizona offers voluntary licensing options like the Licensed Tax Preparer (LTP) credential overseen by the Arizona State Board of Technical Registration for preparers without CPAs. Candidates for the LTP credential must pass approved exams, prove tax prep experience, and undertake ongoing development.

For those seeking to demonstrate specialized preparation expertise for intricate tax situations, the IRS offers the Enrolled Agent (EA) certification. This extensive certification involves comprehensive testing across all aspects of taxation and requires continuing education to maintain active EA status.

Career Opportunities and Earning Potential

Once qualified, there are abundant job opportunities for tax preparers in Arizona, including launching an independent preparation firm, adding tax services to existing accounting practices, or working remotely for larger national tax chains.

Arizona tax preparers can increase their profitability by developing expertise in niche areas such as expat taxes, senior services, IRS audit defense, or business tax credit planning. This allows them to command higher billing rates and client loyalty.

Additionally, preparers can boost their revenue by introducing additional services such as tax advice, representing clients in IRS audits, and providing bookkeeping or payroll services that integrate with tax preparation.

According to the Arizona Office of Economic Opportunity, tax preparer earnings average around $45,000, ranging from $30,000 for entry-level roles to $80,000+ for experienced, certified preparers managing higher-complexity filings or their own client books.

Tax law career progression

A career in tax law is a stable and rewarding choice for professionals in Arizona. While there are no standardized prerequisites to become a tax preparer in the state, there are several pathways to gaining the necessary qualifications and credentials. Here is a step-by-step guide to help you understand the career progression in the field of tax law:

• Education and Background: While not mandatory, pursuing a bachelor's degree in accounting, finance, or business administration provides a strong foundation for a career in tax law. Additionally, specialized tax preparation certificate programs, such as the Registered Tax Return Preparer (RTRP) course, offer practical knowledge in tax code, filing processes, income, deductions, and ethical practices.
• Licensing and Certifications: In Arizona, all paid tax preparers are required to have a Preparer Tax Identification Number (PTIN) issued by the IRS. This is a mandatory requirement and comes with an initial application fee of $35 and annual renewals of $35. While there is no universal license for tax preparers, additional certifications like the Licensed Tax Preparer (LTP) credential in Arizona can enhance your credibility and eligibility for more complex tax filings.
• Enrolled Agent Status: Obtaining the Enrolled Agent (EA) certification from the IRS is a significant step towards becoming a specialized tax expert. It involves extensive testing across all aspects of taxation and demonstrates your expertise in handling intricate tax situations. Enrolled agents are licensed by the IRS and must meet specific requirements, including passing a comprehensive three-part examination and completing continuing education credits.
• Finding Job Opportunities: Once you have the necessary qualifications and certifications, you can explore various job opportunities in Arizona. These include launching your independent tax preparation firm, working with existing accounting practices, or joining remote preparation roles with national tax chains like H&R Block. You can also find employment with local tax providers or larger CPA practices, where you can gain experience and progress towards senior advisory roles.
• Maximizing Earning Potential: To increase your profitability as a tax law specialist in Arizona, consider developing expertise in niche areas such as expat taxes, senior services, IRS audit defense, or business tax credit planning. You can also offer additional services, such as tax advice, audit representation, and bookkeeping, to command higher billing rates. Utilizing premium tax software can also justify billing rate increases.
• Career Advancement: As you gain experience and establish yourself in the field of tax law, you can explore opportunities for career advancement. This could include pursuing board certification as a Tax Law Legal Specialist in Arizona, which requires a minimum of five years of legal practice, with at least two years in the state, and a substantial focus on tax law. Alternatively, you can aim for partnership or advisory roles within your firm or expand your independent practice to serve a wider range of clients.

Frequently asked questions