12

Who is allowed to do US taxes: PTIN, EA, CPA, attorney, and what they charge

Ask who does taxes in America and the answer comes back “CPAs”. It is the wrong answer, or at least a quarter of the right one. A CPA is a state accounting licence, not a permit to file returns; the IRS’s own tax credential is the Enrolled Agent; attorneys are the third of the three with full rights before the IRS; and more than half the country’s paid preparers hold no credential at all, quite legally, because a court took that power away from the IRS in 2014. This chapter is the map of that profession: the four tiers, what each may actually do, how each is made, what each is on the hook for, what they charge their clients in a year, and which of them a practice run from Pakistan can staff or become.

2026-08-26 · requirements and fees are those published for 2026; IRS pages are the primary source, with NASBA for licensure counts and the NATP and NSA fee studies for prices. Chapter 7 covers the returns themselves and chapter 11 the company that files them.
Executive summary

Anyone with a Preparer Tax Identification Number — $18.75 a year, no exam — may prepare and sign US tax returns for money, a consequence of Loving v. IRS in 2014; more than 800,000 people hold one and paid preparers file over 85 million individual returns a year. What a credential buys is the right to represent a client before the IRS, and only three carry it in full: Certified Public Accountants (a state licence, about 653,000 of them), Enrolled Agents (the IRS’s own tax-only credential, about 65,000, earned by a three-part exam with no citizenship or residency test) and attorneys. Transmitting the return is a separate permission again — an EFIN, held by a firm, not a person. On price: a straightforward Form 1040 runs $185 to $280 depending on who signs it, a small company’s return $500 to $2,500, CPA time $150 to $450 an hour, and a small business that buys bookkeeping as well as returns spends $1,500 to $6,500 a year, or $5,400 to $11,000 once there is payroll. For a Pakistani practice the conclusion of chapter 7 holds and sharpens: hire unlicensed staff to do the work, earn the EA to sign it, and keep a US firm with an EFIN to send it.

12.1The rule that surprises everyone

There is no federal licence to prepare a US tax return. The IRS tried to create one — the Registered Tax Return Preparer regime of 2011, with a competency exam and continuing education — and in Loving v. IRS the D.C. Circuit held in 2014 that it had no statutory authority to do so. The IRS dropped its appeals. What survived is a single administrative requirement: anyone who prepares a federal return for compensation must hold a PTIN, a Preparer Tax Identification Number, and write it on every return they sign.

The PTINDetail
Cost$18.75 a year for 2026 — $10 to the IRS and $8.75 to its contractor
RequirementsIdentity, a tax-compliant record, and a fee. No exam, no degree, no experience
RenewalEvery year, by 31 December, for the following filing season
How many hold oneMore than 800,000
Available to a non-US person?Yes — without a Social Security number, by Form W-12 with Form 8946 and notarised identity documents. Chapter 7 Plate 7.4 has the detail

The scale of the unregulated part is not marginal. Paid preparers file over 85 million individual returns a year, more than half of all individual returns, and the majority of those preparers are what the IRS calls unenrolled: no credential, no test, no continuing education requirement. The tax profession America actually has is a licensed minority sitting on top of a very large unlicensed trade.

12.2The four tiers

TierWhat it isWho grants itMay prepare and signMay represent before the IRS
Unenrolled preparerA PTIN and nothing else: the storefront preparer, the bookkeeper who also does the 1040, the seasonal staff of a chainnobody — the PTIN is a registration, not a licenceyesno
AFSP participantAn unenrolled preparer who does 18 hours of continuing education a year voluntarilyIRS, as a Record of Completionyeslimited — examinations only, and only on returns they prepared and signed
Enrolled AgentThe IRS’s own credential, tax only, earned by examinationIRSyesunlimited
CPAA state accounting licence covering audit, attest, accounting and tax — many CPAs never touch a returna state board of accountancyyesunlimited
AttorneyAdmitted to a state bar; tax specialists often hold an LLM in taxationa state supreme court or baryesunlimited

Two smaller federal credentials complete the list: the enrolled retirement plan agent and the enrolled actuary, each with rights limited to their subject matter.

12.3What “representation rights” actually means

This is the distinction the word “CPA” hides. Preparing a return is clerical work anyone may sell. Standing between a client and the IRS — arguing an audit, negotiating a payment plan, signing a power of attorney — is practice before the IRS, governed by Treasury Circular 230, and it is restricted.

The actUnenrolledAFSPEA, CPA, attorney
Prepare and sign a return for a feeyesyesyes
Receive a client’s tax information from the IRS (Form 8821)yesyesyes
Hold a power of attorney and speak for the client (Form 2848)nolimitedyes
Represent in an examination (audit)noonly returns they signedyes
Represent before IRS Appeals or Collectionnonoyes
The §7525 confidentiality privilege in civil tax mattersnonoEA and CPA, civil only; attorneys have the wider attorney-client privilege
Litigate in the US Tax Courtnonoattorneys, and any non-attorney who passes the Tax Court’s own admission exam (a USTCP)

The last line is the profession’s well-kept secret: the Tax Court does not restrict admission by licence. A non-attorney — usually an EA or a CPA — who passes the Court’s written examination, clears character and fitness and is sponsored by two members of its bar may litigate there. There are only a few hundred such practitioners.

12.4The CPA: a state licence, mostly about audit

The CPA is the credential the public knows, and the one whose scope is most often misdescribed. It is granted by one of fifty-five state and territorial boards, not by the IRS, and its exclusive privilege is attest: only a CPA may issue an audit or review opinion on financial statements. Tax is a service many CPAs happen to sell, not the thing the licence is for.

StepWhat it takes in 2026
EducationHistorically 150 semester hours — a bachelor’s degree plus about a year. Since the AICPA and NASBA amended the Uniform Accountancy Act in May 2025, states have been adding a second route: a bachelor’s degree of 120 hours plus two years of verified experience. Ohio, Virginia, Georgia and Maryland are among those already offering it
ExaminationFour sections under the 2024 “CPA Evolution” format: three Core — Auditing (AUD), Financial Accounting and Reporting (FAR), Regulation (REG) — plus one Discipline of the candidate’s choice: Business Analysis and Reporting (BAR), Information Systems and Controls (ISC) or Tax Compliance and Planning (TCP). All four within a rolling 30-month window in most states
ExperienceGenerally one year under a licensed CPA (two in the new 120-hour route)
EthicsA separate ethics examination in most states
UpkeepTypically 40 hours of CPE a year, set by the state board, plus the licence fee
How many653,408 actively licensed CPAs across 53 reporting jurisdictions as of 28 August 2025 — and a well-documented shortage, which is why the 150-hour rule is being unpicked
Open to a Pakistani resident?in principle — some boards license non-residents and non-citizens, and the exam is offered internationally, but education must be evaluated as US-equivalent and the experience must be supervised by a licensed CPA. It is the long road

12.5The Enrolled Agent: the IRS’s own credential

An Enrolled Agent is admitted to practice by the IRS itself, and the enrolment is federal — it is not tied to a state, and it does not expire when its holder moves. Its subject is tax and nothing else, which is exactly the subject in question. For a practice outside the United States it is the credential that matters, because nothing in the rules asks where its holder lives or what passport they carry.

StepWhat it takes in 2026Cost
PTINFirst, and every year thereafter18.75
Special Enrolment Examination, part 1Individuals350
Part 2Businesses — the hardest of the three by reputation350
Part 3Representation, practice and procedure350
The windowAll three parts within three years of passing the first
The vendorPSI Services from 1 March 2026, replacing Prometric; scheduling for the 2026 cycle opened on 1 May with testing from 1 July
EnrolmentForm 23, plus a tax-compliance and suitability check140
Upkeep72 hours of continuing education per three-year cycle, at least 16 a year, of which 2 must be ethicsCE fees
Total to become oneExcluding study materials, which run a few hundred dollars more1,209
How many64,522 active enrolled agents as of December 2025 — one for every ten CPAs
Open to a Pakistani resident?yes — no citizenship or residency test appears anywhere in the rules, and international candidates sit the exam by arrangement with the vendor
Finding

Roughly $1,200 and three examinations buy the same rights before the IRS that a CPA licence buys after 150 credit hours, an experience year and four examinations — for tax work, which is the only work in question. For anyone building a US tax practice from outside the United States, the Enrolled Agent credential is not the consolation prize; it is the correct instrument, and the cheapest serious qualification in the whole of this book.

12.6The attorney, and when a client actually needs one

Tax attorneys are the smallest and most expensive tier, and most small-business work never touches them. What they hold that the others do not is the full attorney-client privilege — the §7525 privilege an EA or CPA enjoys covers civil tax advice only, and evaporates in a criminal investigation or a case about a tax shelter. The rule of thumb: an EA or CPA for everything routine, an attorney when the matter could become a crime, a lawsuit, or a document that will be argued over years later.

SituationWho
Annual returns, payroll filings, sales tax, bookkeepingUnenrolled preparer or bookkeeper, supervised
An audit, an appeal, a payment plan, a penalty abatementEA or CPA
Choosing an entity, a shareholder agreement, an acquisitionAttorney, with the EA or CPA on the numbers
Unreported foreign accounts, suspected fraud, a summons, a criminal referralAttorney first — before anyone else sees the file
Litigation in the Tax CourtAttorney, or a USTCP

12.7The unlicensed majority, and the programme built for them

After Loving, the IRS built a voluntary substitute. The Annual Filing Season Program gives an unenrolled preparer a Record of Completion, a listing in the IRS’s public directory of preparers, and limited representation rights — in exchange for continuing education and an agreement to be bound by the practice rules of Circular 230.

The AFSPDetail
Hours18 a year: a 6-hour Annual Federal Tax Refresher course with a comprehension test, 10 hours of other federal tax law, 2 hours of ethics
DeadlineMidnight on 31 December for the following filing season
Also requiredAn active PTIN and consent to Circular 230 subpart B
What it buysLimited representation before examiners on returns the holder prepared and signed — and a place in the public directory, which is the marketing half of the deal
What it does not buyAppeals, Collection, or any right on a return someone else signed

Below even that sits the largest workforce in the industry and the one a Pakistani firm can actually hire: bookkeepers, who hold no federal credential at all. Their certifications — QuickBooks ProAdvisor, the AIPB and NACPB programmes — are private and confer no rights. That is not a defect. Bookkeeping is the work; the credential is only needed at the moment a return is signed or the IRS is telephoned.

12.8Which number does what

Four different identifiers get confused in every conversation about this, and the confusion is expensive because they are granted on different terms. Chapter 7 section 6 works through the transmission side; this is the summary.

NumberBelongs toPermitsTest for getting one
PTINa personpreparing returns for a feea fee and a clean tax record
EFINa firmtransmitting returns through IRS e-file as an Authorized e-file Providerevery principal must be a US citizen or lawful permanent resident, fingerprinted or credentialed — the wall a Pakistani practice cannot climb
CAF numbera representativeindexing the powers of attorney (Form 2848) and authorisations (8821) a representative holdsissued on the first filing; no credential needed for 8821
TCCa filer of information returnsfiling 1099s through IRISan e-Services identity check, up to 45 days
94x PINan employersigning its own payroll returns electronicallyan application through software; the IRS posts the PIN
Reporting Agent (Form 8655)a payroll firmfiling and depositing employment taxes under its own credentialsan authorisation signed by the employer — this is what QuickBooks Payroll is

12.9What they charge

Prices vary by geography more than by anything else, but the shape is consistent: the return itself is priced per form, the advice is priced per hour, and the bookkeeping is priced per month. The three add up to what a business actually spends in a year.

Per returnTypical feeSource and note
Form 1040, straightforward, by an unenrolled preparer185NATP’s 2025 fee study, base return with Schedules 1–3
The same, by an Enrolled Agent228the same study
The same, by a CPA280the same study — a 51% premium over the unenrolled preparer for identical work
Schedule C added to a 1040~245NSA survey, adjusted for inflation
Form 1065, a partnership~938the same
Form 1120-S, an S corporation~1,123the same
A small company’s return, all in500–2,500the working range quoted by US firms in 2026
Form 5472 with a pro forma 1120 for a foreign-owned LLC150–400chapter 11’s reader; annual bundles with a registered agent start around $599
Per hour2026 rateNote
Bookkeeper30–80often sold as a monthly package instead
Staff accountant in a CPA firm75–175the person who actually does the work
CPA150–450most US firms bill in this band
Partner, major metro300–800
Enrolled Agentat or just under CPA ratesfor representation work the market prices the right, not the letters
Audit or collection representation150–500hourly, occasionally a fixed fee per stage
Tax attorneyabove partner ratesand worth it exactly when section 12.6’s last two rows apply
Per month2026 feeWhat is in it
Basic bookkeepingfrom 300categorising, reconciling, a monthly report pack
Bookkeeping with payroll and reporting500–2,500the common small-business package
Controller-level service3,000–6,000+for a company with staff and inventory
Payroll processing alone50–150plus a few dollars per employee
Plate 12.1 · What a year of professional help actually costs, three businesses
The clientWhat they buyLowHigh
Freelancer
Schedule C, keeps their own books
Form 1040220280
Schedule C245245
One state return50150
A year515675
One-person S corporation
with payroll, as chapter 7 section 2 describes
Bookkeeping, monthly3,6007,200
Payroll processing, monthly6001,800
Form 1120-S9001,500
The owner’s Form 1040300500
A year5,40011,000
Foreign-owned single-member LLC
chapter 11’s Pakistani reader
Form 5472 and pro forma 1120150400
Bookkeeping, if bought03,600
A year1504,000

Against these, the industry-wide figure US firms quote is that most small businesses spend $1,500 to $6,500 a year on accounting and tax together — which is the middle column of this plate, arrived at from the other direction.

Three things move a price inside those bands. Who signs: the same 1040 is $185 unenrolled and $280 by a CPA. The state of the books: a preparer handed a shoebox charges for the bookkeeping first, and that is where a surprise bill comes from. Whether anything is in dispute: an audit turns a fixed-fee client into an hourly one at $150 to $500 an hour, and that single difference is why representation rights are worth paying a credential for.

12.10What a preparer is on the hook for

The absence of a licence is not an absence of liability. The penalties fall on the preparer personally, they are per return, and they are indexed for inflation.

RuleWhat triggers it2026 amount
§6694(a)An unreasonable position that understates the tax1,000 or 50% of the fee, whichever is greater
§6694(b)Wilful understatement or reckless disregard of the rules5,000 or 75% of the fee
§6695(a)–(e)Failing to sign, to give the client a copy, to keep a copy, to show the PTIN65 per failure, capped around 33,000
§6695(g)Failing the due-diligence requirements on the earned income credit, child credit, education credit or head-of-household status — documented on Form 8867665 per failure, no cap
§7216Disclosing or using return information without the client’s consent — the rule that governs offshoring, and the one chapter 7 section 6 works throughcriminal
Circular 230Incompetence, disreputable conduct, conflicts, contingent feescensure, suspension, disbarment from practice
The e-file mandateA preparer who expects to file 11 or more individual returns in a year must e-file them

12.11The states that regulate anyway

Federal law leaves preparers unlicensed; a handful of states do not.

StateWhat it requiresReaches a preparer outside the state?
OregonThe only true licence: a Licensed Tax Preparer works under a Licensed Tax Consultant, with examinations and a state boardyes, for Oregon returns
CaliforniaCTEC registration: 60 hours of education, a $5,000 surety bond, 20 hours of continuing education a yearno — it applies to preparers working inside California
New YorkAnnual registration, $100 once a preparer files ten or more returns, with continuing education — and it reaches preparers “within and outside” the stateyes
MarylandRegistration with an examination or proof of experienceyes, for Maryland returns
ConnecticutA $100 permit every two years, above ten Connecticut returnsyes
IllinoisThe PTIN on every Illinois return; no education requirement

CPAs, EAs and attorneys are generally exempt from these state regimes, which is the practical argument for the credential in a practice that files across many states.

12.12What this means for a practice run from Pakistan

Put chapter 7’s constraint next to this chapter’s prices and the staffing model writes itself.

RoleCredential neededWhere it can sitWhat the US market pays for it
Bookkeeping, reconciliations, payroll data, workpapersnonePakistan$300–$2,500 a month, per client
Preparing the returnPTIN — obtainable from PakistanPakistaninside the per-return fees of section 12.9
Signing as paid preparerPTIN; a credential if the client will ever be representedPakistanthe difference between $185 and $280 on a 1040
Representing the client at an auditEA — obtainable from Pakistan for about $1,200Pakistan$150–$500 an hour
Transmitting the returnEFIN — not obtainable: its principals must be US personsthe United Statesthe reason a US signing partner stays in the arrangement
Audit and attest opinionsCPA licencethe United Statesnot our market

Two consequences follow for the product this book is about. First, the deliverable that matters is a clean set of workpapers in the form’s own order — the Tax Summary of chapter 7 enhancement 1 — because that is what an offshore team hands to whoever signs and transmits. Second, the §7216 consent is not paperwork to be skipped: sending a US client’s return information abroad without it is a criminal matter, and the consent language is prescribed.

In one sentence

CPAs are not the people who do US taxes — they are one of three credentials with full rights before the IRS, sitting above an enormous legal trade of unlicensed preparers; the credential that actually fits a tax practice, costs about $1,200 and asks nothing about your nationality is the Enrolled Agent.

12.13Glossary of acronyms

AcronymStands forWhat it is
AFSPAnnual Filing Season ProgramThe IRS’s voluntary programme for unenrolled preparers: 18 hours of CE a year for a Record of Completion, a directory listing and limited representation rights.
AFTRAnnual Federal Tax RefresherThe 6-hour course, with a comprehension test, at the centre of the AFSP.
AICPAAmerican Institute of Certified Public AccountantsThe profession’s national body; writes the CPA Exam with NASBA and maintains the Uniform Accountancy Act.
AIPB / NACPBAmerican Institute of Professional Bookkeepers / National Association of Certified Public BookkeepersPrivate bookkeeping certifications; no legal rights attach to either.
AUD, FAR, REGAuditing and Attestation; Financial Accounting and Reporting; RegulationThe three Core sections of the CPA Exam. REG is the tax one.
BAR, ISC, TCPBusiness Analysis and Reporting; Information Systems and Controls; Tax Compliance and PlanningThe three Discipline sections; a candidate passes exactly one.
CAFCentralized Authorization FileThe IRS index of powers of attorney and information authorisations; a representative’s CAF number identifies them on Forms 2848 and 8821.
CE / CPEContinuing education / continuing professional educationThe annual upkeep: 72 hours per three-year cycle for an EA, typically 40 hours a year for a CPA, 18 for an AFSP participant.
Circular 230Treasury Department Circular No. 230The rules of practice before the IRS: who may represent, what conduct is sanctionable, and the penalties for breach.
CPACertified Public AccountantA state licence covering accounting, audit and tax; the only credential that may issue an audit or review opinion.
CTECCalifornia Tax Education CouncilRegisters preparers working inside California: 60 hours of education, a $5,000 bond, 20 hours of CE a year.
EAEnrolled AgentThe IRS’s own tax credential, earned by the three-part SEE; unlimited representation rights; no citizenship or residency requirement.
EFINElectronic Filing Identification NumberA firm’s permission to transmit returns through IRS e-file. Every principal must be a US citizen or lawful permanent resident.
EROElectronic Return OriginatorThe kind of Authorized IRS e-file Provider that originates a return for transmission — in practice, the signing firm.
ERPAEnrolled Retirement Plan AgentA federal credential with representation rights limited to retirement-plan matters.
LLMMaster of LawsThe postgraduate law degree, in taxation, that most specialist tax attorneys hold.
NASBANational Association of State Boards of AccountancyCoordinates the CPA Exam and keeps the licensee database from which the 653,408 figure comes.
NATP / NSANational Association of Tax Professionals / National Society of AccountantsMembership bodies whose periodic fee studies are the source of the prices in section 12.9.
PTINPreparer Tax Identification Number$18.75 a year; required of anyone preparing federal returns for compensation; available without a Social Security number.
RTRPRegistered Tax Return PreparerThe licence regime the IRS created in 2011 and lost in Loving v. IRS in 2014. It no longer exists.
SEESpecial Enrollment ExaminationThe three-part Enrolled Agent examination: individuals, businesses, representation. $350 a part in 2026, delivered by PSI.
TCCTransmitter Control CodeThe credential for filing 1099s through the IRS’s IRIS system.
USTCPUS Tax Court PractitionerA non-attorney admitted to litigate in the Tax Court by passing its own written examination.
VITA / TCEVolunteer Income Tax Assistance / Tax Counseling for the ElderlyIRS-sponsored programmes whose trained volunteers prepare simple returns free of charge.
§6694, §6695Preparer penalty sections of the Internal Revenue CodeUnderstatement penalties and the per-failure administrative ones, including the $665 due-diligence penalty.
§7216Internal Revenue Code section 7216Makes unauthorised disclosure of return information a crime; the source of the written consent required before work goes offshore.
§7525Internal Revenue Code section 7525The confidentiality privilege for federally authorised tax practitioners — civil matters only, and narrower than the attorney-client privilege.

12.14Sources

IRS pages for the credentials, the programme and the penalties; NASBA and the AICPA for CPA licensure; the courts for Loving; the NATP and NSA fee studies and current US firm quotations for the prices in section 12.9, which are ranges, not quotations.

  1. IRS, PTIN requirements for tax return preparers; IRS reminds tax pros to renew PTINs for the 2026 tax season; PTIN fee FAQ — irs.gov/tax-professionals/ptin-requirements-for-tax-return-preparers · irs.gov/newsroom/irs-reminds-tax-pros-to-renew-ptins-for-the-2026-tax-season
  2. Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014); IRS statement on the ruling; Journal of Accountancy and Accounting Today reports — caselaw.findlaw.com/court/us-dc-circuit/1657003.html · irs.gov/newsroom/irs-statement-on-court-ruling-related-to-return-preparers
  3. IRS, Annual filing season program and its FAQ; General requirements for the AFSP record of completion — irs.gov/tax-professionals/annual-filing-season-program
  4. IRS, Become an enrolled agent; Enrolled agents: frequently asked questions; Active enrolled agents and the Freedom of Information Act; Federal Register, Enrolled Agent Special Enrollment Examination user fee update (20 April 2026) — irs.gov/tax-professionals/enrolled-agents/become-an-enrolled-agent · federalregister.gov/documents/2026/04/20/2026-07681
  5. NASBA, How many CPAs? (653,408 as of 28 August 2025); AICPA and NASBA on the Uniform Accountancy Act amendment of May 2025 and the CPA Competency-Based Experience Pathway; Accounting Today and CFO Dive on state adoptions — nasba.org/licensure/howmanycpas/
  6. NASBA, CPA Exam — Core and Discipline structure and the 30-month window — nasba.org/exams/cpaexam/
  7. United States Tax Court, Guidance for practitioners and the non-attorney admissions examination — ustaxcourt.gov/practitioners/ · exam.ustaxcourt.gov
  8. Treasury Department Circular No. 230; IRS, Understanding tax return preparer credentials and qualifications; the IRS Directory of federal tax return preparers with credentials and select qualifications — irs.gov/tax-professionals
  9. IRS, IRM 20.1.6 Preparer and promoter penalties; Rev. Proc. 2025-32 for the 2026 inflation-adjusted amounts, including the §6695(g) due-diligence penalty of $665 — irs.gov/irm/part20/irm_20-001-006 · irs.gov/pub/irs-drop/rp-25-32.pdf
  10. NATP 2025 fee study, as reported; National Society of Accountants Income and fees survey, inflation-adjusted; TaxDome, Accounting Today and US firm price guides for 2026 hourly and monthly ranges — connect.nsacct.org/nsacctwww/knowledgecenter/income-fees-survey
  11. Oregon Board of Tax Practitioners; California CTEC; New York State Department of Taxation and Finance preparer registration; Maryland Board of Individual Tax Preparers; Connecticut Department of Revenue Services — oregon.gov/obtp · ctec.org · tax.ny.gov/tp/reg/tpreg.htm