California Tax Preparer Guide

Your Comprehensive Guide to Becoming a California Tax Preparer

There are a variety of advantages to becoming a tax preparer. Perhaps you’re looking for a new career that offers flexibility and the potential for a high income. Or maybe you’re already working in accounting or finance and want to specialize in taxes. Whatever your reasons, if you’re looking to become a California tax preparer, you’ve come to the right place!

In this comprehensive guide we’ll explore how to become a licensed and bonded tax preparer in the Golden State. We’ll cover everything from the Tax Preparer Surety Bond and registration process to continuing education requirements. Regardless of where you are in the process, we can help you with the next steps!

What is a California Tax Preparer?

A California tax preparer is a professional who helps taxpayers calculate and file their state and federal taxes. Tax preparers can work for themselves or a tax preparation company. They may also work in an accounting or financial planning firm. Regardless, tax preparers must be registered with the state to operate legally. To become a registered tax preparer in California, individuals must meet the requirements set forth by the California Tax Education Council (CTEC).

Keep in mind that the role and experience required of a registered tax preparer vary from that of a Certified Public Accountant (CPA). CPAs complete formal education and pass exams, have experience working as accountants, and are qualified to provide other financial services such as auditing, bookkeeping, and financial consulting. In contrast, registered tax preparers in California are solely qualified to prepare and file state and federal taxes. However, they cannot provide other accounting or financial services.

Who is required to register with CTEC?

In California, anyone who assists with or prepares tax returns for another person for a fee (or other consideration) must register as a tax preparer with the California Tax Education Council (CTEC). Specifically, a tax preparer must be registered if they:

  • Assist with or prepare state or federal income tax returns
  • Assume final responsibility for such returns, and
  • Offer these services to the public.

Individuals working as CPAs, Enrolled Agents (EAs), attorneys who are members of the California State Bar, and certain banking or trust officials do not need to register as tax preparers to provide tax preparation services.

California Tax Preparer Steps

Steps to Becoming a CTEC Registered Tax Preparer in California

To become a CTEC registered tax preparer, you must complete the following steps.

Step 1: Complete a qualifying education course

Complete a 60-hour qualifying education course from a CTEC-approved provider within 18 months before submitting your application. You can find a list of CTEC-approved education providers here.

Step 2: Obtain a Preparer Tax Identification Number

Apply for a Preparer Tax Identification Number (PTIN) from the IRS. A PTIN is an identification number that all tax return preparers must use when filing federal tax returns. You can apply for a PTIN online at the IRS website, by mail, or by fax.

Step 3: Complete the Live Scan Process

Becoming a Tax Preparer in California

The CTEC requires all new tax preparers to submit to fingerprinting and pass a background check to register. To complete the process, you must create a Live Scan account, complete the background questionnaire section and Live Scan form, and then take the completed form to a Live Scan location for fingerprinting. The information collected will be sent to the California Department of Justice (DOJ). The California DOJ will notify CTEC of your background information electronically. After which, CTEC will review your background information. This process can take anywhere from 2-8 weeks.

Step 4: Obtain a surety bond

The next step is to purchase a $5,000 Tax Preparer Surety Bond, also called the CTEC Bond. The CTEC requires this bond to protect consumers from any losses caused by unethical or incompetent tax preparers. Typically the bond is effective for a 5-year term and does not require a credit check to qualify. We’ll discuss this bond and how it works in more detail below.

Step 5: Register and pay the registration fee.

Once you have completed the other steps in the process, you are ready to submit your application to the CTEC. You can do so directly on the CTEC’s website. To register, you must enter all required personal information and a current email address. You must also pay a $33 registration fee (as of 2022).

What is a Tax Preparer Bond, and why do you need one?

One of the steps of registering as a tax preparer in California is getting a $5,000 surety bond. But what is a surety bond, and why do you need one?

What is a Tax Preparer Bond

A Tax Preparer Surety Bond is a guarantee that protects consumers from financial losses caused by unethical or incompetent conduct committed by registered tax preparers. The bond ensures that the registered tax preparer will comply with all state laws and regulations when preparing and filing taxes. If a consumer suffers injury due to the tax preparer’s actions, the injured party can file a claim against the bond. If the surety finds the claim valid, they will compensate the claimant (the injured party that filed the claim) up to the bond amount. The principal is ultimately responsible for reimbursing the surety for all valid claims that get paid out, plus additional fees and expenses incurred.

There are three parties involved in a surety bond:

  • The principal—the person who must obtain the bond (the tax preparer).
  • The obligee—the person or entity requiring the bond (in this case, the CTEC).
  • The surety company—this is the company that writes and backs the bond.

How much does a California Tax Preparer Bond cost?

While the CTEC requires all registered tax preparers in California to obtain a $5,000 Tax Preparer Bond, the $5,000 bond amount is not what you pay to get one. Rather, you’ll pay a single premium for the entire term of your bond. In most cases, tax preparers in California can get a $5,000 CTEC Bond for a premium of about $100 for a 5-year bond term.

California Tax Preparer Bond Cost

Fortunately, getting this bond is relatively easy because there is no credit check requirement! To get your CA Tax Preparer Bond, simply apply for your bond online.

Ready to get started?

Becoming a registered tax preparer in California does not have to be complicated. This guide provides all the information you need to begin the registration process.

And we at South Coast Surety are here to help you with your bonding needs along the way. If you ever have any questions about getting your California Tax Preparer Bond, our surety experts can help. Call us at 949-361-1692 or email us at apps@southcoastsurety.com. We’re always happy to help!

Key Takeaways

  • To work as a tax preparer in California, you must be registered with the California Tax Education Council (CTEC).
  • There are several steps you must take to become a registered tax preparer in California. These include completing the education requirements, getting a background check and fingerprinting, and obtaining a PTIN and a Tax Preparer Bond.
  • The CTEC requires all registered tax preparers in California to obtain a $5,000 Tax Preparer Bond.
  • This bond costs about $100 for a 5-year term and is easy to obtain by visiting South Coast Surety online.

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