What Is an Accredited Tax Preparer (ATP)?

Tax professionals designated as Accredited Tax Preparers (ATP) can help ensure an individual’s returns meet the standards of the IRS. By passing an exam, the national ATP credential demonstrates a thorough understanding of current tax code and how to prepare individual tax returns.

Use SmartAsset’s free tool to find a financial advisor who can help you file your taxes and make an overall tax plan.

What Is an Accredited Tax Preparer Credential?

The Accredited Tax Preparer certification is offered by the Accreditation Council for Accountancy and Taxation (ACAT), a nonprofit testing, accrediting and monitoring organization ¹ . The course extensively covers topics relating to Form 1040, including supporting schedules, self-employed returns and ethics.

To receive this accreditation, there are no education or work experience requirements. However, those seeking the credential must pass an online exam that costs $250 ² . To help prepare, a free Exam Blueprint is available online ³ .

To keep their credentials current, ATPs must complete 24 hours of continuing education each year ⁴ . The annual renewal fee for a single ACAT credential, including the ATP designation, is $150 ⁵ .

ATP Services for Clients

The ATP credential narrowly focuses on one thing: preparing individual federal tax returns.

This is not a broad accounting or financial planning credential. It is for professionals whose primary work is filing individual tax returns accurately and on time. The exam tests proficiency in several areas, including Form 1040 and its supporting schedules. It also covers self-employment returns and tax ethics.

A client who works with an ATP can expect help gathering and organizing tax documents, identifying eligible deductions and credits and completing and filing a federal return. An ATP can also answer questions about how specific income sources or life events affect their tax liability. Some ATPs also prepare state returns, though the credential itself focuses on federal filing.

The situations an ATP is best equipped to handle are straightforward to moderately complex individual returns. These can include several types of tax situations.

• W-2 employees with itemized deductions
• Freelancers reporting self-employment income on Schedule C
• Taxpayers claiming education credits
• Retirees with Social Security and pension income

The credential also prepares holders to navigate common complications. These can include rental income, capital gains from investment sales and earned income tax credits.

ATPs are most relevant during tax filing season. This is when individuals need someone competent to prepare their returns without the higher rates of a CPA or enrolled agent.

An ATP can also be a good fit for a taxpayer who prepares their own returns but wants a set of trained eyes after a major life change. This can include marriage, divorce, a new home purchase or an inheritance.

The ATP does carry limited IRS representation rights. This means the holder can represent clients before certain IRS employees, but only for returns they personally prepared and signed. They cannot handle appeals or collections, nor can they represent clients whose returns were prepared by someone else.

Clients facing an audit, back tax issues or complex IRS disputes need a CPA, enrolled agent or tax attorney for this level of representation.

How Much Do Clients Pay to Work With an ATP?

ATPs typically charge on a per-return basis. The client pays a flat fee to have their federal return prepared. The price varies based on the complexity of the filing. A simple W-2 return with a standard deduction will generally cost less than a return involving self-employment income, rental properties, investment gains and multiple schedules. Some ATPs also charge separately for state return preparation.

Pricing tends to fall below what a CPA or enrolled agent would charge for comparable work. The ATP credential has a narrower scope of practice that requires less training. This is usually reflected in the fee. An ATP can offer solid value at a lower price point. This is especially applies to taxpayers with straightforward returns who do not need year-round tax planning or IRS representation beyond the basics.

Fees can also vary based on geography and the size of the firm. Also relevant is whether the ATP operates independently or within a larger tax preparation business. An independent ATP in a smaller market may charge differently from one working at a national chain. Some ATPs bundle pricing for households filing multiple returns. Ot hers charge per form or schedule added to the base return.

Because ATPs are tax preparers rather than registered investment advisers, they do not file a Form ADV Part 2 with the SEC. Clients will not find ATP fee information through the SEC’s Investment Adviser Public Disclosure database ⁶ . Instead, the preparer typically posts pricing on their website during an initial consultation. They may also provide it in an engagement letter before work begins.

Before hiring an ATP, clients should ask a few targeted questions.

• What the base fee covers
• What triggers additional charges
• Whether the quoted price includes both federal and state returns
• How the preparer handles amendments if an error is discovered after filing
• Whether there is an additional cost for responding to basic IRS correspondence about the return
• How pricing changes if the client’s tax situation becomes more complex

A few direct questions at the start can help a taxpayer understand exactly what they are paying for so they can avoid unexpected charges after filing.

Benefits of the ATP Designation for Advisors

Having an accredited tax preparer credential sets tax professionals apart in the marketplace. For clients, choosing an ATP is a strong signal that the person they’re working with has advanced expertise.

Because they’ve already passed the ACAT exam, ATPs don’t have to take additional classes to earn a Record of Completion for the IRS’s Annual Filing Season Program (AFSP) ⁷ . This initiative encourages non-credentialed tax-return preparers to participate in continuing education courses.

IRS Representation Rights for an ATP

While any tax professional with a preparer tax identification number (PTIN) can legally prepare federal tax returns, not all can represent clients before the IRS. Even among those who can, only a select group possesses unlimited representation rights.

• Unlimited representation rights. Among this group are certified public accountants, attorneys and enrolled agents. These professionals have no restrictions on whom they can represent, what tax issues they can handle or which IRS office they can appear before. They can even represent clients whose returns they did not prepare.
• Limited representation rights. Tax preparers with limited representation rights can represent only clients whose returns they have prepared and signed. They can do so only before customer service representatives, revenue agents and similar IRS employees. Tax-return preparers with limited representation rights cannot represent clients in appeals or collection matters, even if they prepared and signed their clients’ tax returns. Participants in the IRS’s Annual Filing Season Program — including accredited tax preparers, who automatically qualify — have limited representation rights.
• No representation rights. Finally, there are PTIN holders. They have an active preparer tax identification number but no professional credentials and do not participate in the Annual Filing Season Program. PTIN holders are only authorized to prepare tax returns; they cannot represent clients before the IRS for any reason ⁸ .

Bottom Line

Most tax preparers aren’t accountants and may only hold an associate’s degree. However, the ATP designation after someone’s name indicates they’ve invested time (and money) in furthering their understanding of the tax code. To earn their credential, ATPs must pass a 100-question, multiple-choice exam that evaluates their proficiency in preparing individual tax returns, as well as knowledge of Form 1040 issues and ethics.

Tax Filing Tips

• Filing your taxes on time is important, but so is your overall tax strategy. A financial advisor can help you make a tax plan and execute it in order to lower your tax liability. Finding a financial advisor who meets your needs and goals doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• To make sure your tax return is complete and up to IRS standards, consider hiring an accredited tax preparer. An ATP might also be able to find you more deductions or exemptions that you wouldn’t have known about on your own.
• If you do decide to hire an accredited tax preparer, make sure they know about any major life events, like an inheritance or a divorce, that may affect your tax situation.
• You might also want to consult with a financial advisor to help you plan for more than just your annual tax return, including issues concerning retirement and estate planning.

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