Does your tax professional HAVE to be a CPA?

[Dustin Lee Cotliar]

Hey BP community —

I am a neophyte investor who is trying to figure out how to plan my tax strategy, Implement a good bookkeeping system etc. In the hopes of finding an accountant, I asked a local real estate professional (who also happened to finance my first loan) who he recommended; he set me up with a person who does all of his taxes. He also invests in real estate.

This tax professional thus far has made a fantastic impression on me, sounds super knowledgeable, is very real estate focused, is available to help me plan and strategize and so forth. They have 25 years of experience doing peoples taxes and investing in real estate. They also help clients with bookkeeping.

Only ‘hiccup’ is that this person not an official CPA, though I believe they are a ‘certified tax professional or preparer’. I was under the impression that they couldn’t represent people in an audit but they said that they definitely have represented clients in the past during audits.

I trust them but I am hung up on them not being a CPA. Is this a deal breaker?? Anyone out there work with non CPAs who are fantastic and who meet all of their accounting needs? Looking for advice and thoughts on both sides of the coin. Thank you!

[Michael Plaks]

@Dustin Lee Cotliar

There's no licensing or certification for people to prepare tax returns or give tax advice. Literally anyone is allowed to do so legally, once they obtain an IRS number known as PTIN. Those numbers are given pretty much to anybody who filed his own tax returns and is not a felon. No competence testing.

The only type of tax work that requires licensing is representation before the IRS, as in acting on behalf of clients who have problems with the IRS: audits, unpaid taxes, unfiled tax returns etc. For that type of work, you have CPAs, EAs (I'm one of them) and attorneys:  
https://www.irs.gov/tax-professionals/understanding-tax-return-preparer-credentials-and-qualifications

CPAs have extensive training in accounting, with taxes being a relatively small part of the training. Some CPAs specialize in taxes, and others have no clue about taxes. We have a number of clients who are active CPAs but do not work in taxation.

EAs have training specifically in taxation and IRS representation. Some are former IRS agents who repented for their sins and now work for the people. 

Attorneys obviously are trained in law, including tax law. Some of them practice in taxation, and others are as scared of tax rules as their clients.

At the end of the day, what matters is knowledge and service. You do have a better chance of finding desired experience among the licensed professionals, but being licensed guarantees nothing. We all know utterly incompetent lawyers, doctors and CPAs.

From your description, you found an excellent accountant. Do not worry about his lack of CPA credential.