The Annual Filing Season Program (AFSP) is a voluntary credential for tax professionals offered by the IRS. The AFSP is right for tax preparers who are not already enrolled agents, certified public accountants, or attorneys. IRS issues a Record of Completion to tax preparers completing 18 hours of tax education and meeting other requirements.
What the Annual Filing Season Program Is
The AFSP is a voluntary credential for tax professionals offered by the IRS. Tax professionals who meet the requirements obtain a Record of Completion, are listed for one year in the public directory of tax preparers published by the IRS and can represent their clients (with limitations) before the IRS.
How the Annual Filing Season Program Works
Both first-time applicants and renewing tax preparers need to meet three requirements to participate in the AFSP and receive their Record of Completion. First, they take 15 or 18 hours of continuing education on federal tax topics. Second, they maintain an active preparer tax identification number (PTIN). Third, they agree to follow rules for professional conduct such as not giving false or misleading information to the IRS.
1. Meet the Annual Filing Season Program Continuing Education Requirements
Interested tax professionals will need to take 15 or 18 hours of continuing education from IRS-approved continuing education providers each year. Both first-time and renewing participants need to complete the six-hour Annual Federal Tax Refresher (AFTR) course, plus two hours of ethics, and 10 hours of other courses of your choice on federal tax topics.
Find a Continuing Education Provider & Classes to Take
Various professional societies, companies, and colleges offer continuing education for the AFSP. Many continuing education courses are delivered online in a self-study format. You can browse a list of IRS-approved continuing education providers. The six-hour AFTR course is titled the same by all continuing education providers. Check the category your classes fall under, as you will need at least two hours of ethics courses. The remainder of your courses can be on any federal tax topic.
Remember that Only ‘IRS Continuing Education’ Counts Toward the AFSP
Some providers offer continuing professional education courses for certified public accountants, which are often labeled as “CPE,” as well as continuing education for the AFSP, often labeled as “CE.” Check what type of credits a course offers carefully as only courses that are approved for IRS continuing education will count towards the AFSP.
Look for the IRS-approved continuing education provider logo when choosing your courses.
Keep in Mind You Might Qualify for an AFTR Exemption
Some tax preparers, such as those who have a state-issued credential from California, Oregon, and Maryland, do not need to take the six-hour AFTR course. Also, they need to complete 15 hours of continuing education instead of 18 hours.
2. Obtain or Renew Your Preparer Tax Identification Number Annually
Tax professionals must obtain and annually renew a preparer tax identification number (PTIN). In fact, anyone who gets paid to prepare tax returns must have an active PTIN. Tax professionals obtain a PTIN for free directly from the IRS. PTINs must be renewed annually before filing tax returns for the new tax season.
3. Agree to Comply With the AFSP IRS Professional Conduct Standards
To qualify for the AFSP, tax professionals must agree to follow certain rules of professional conduct such as being diligent to prepare accurate tax returns and avoiding deceptive advertising. The full list of standards for professional conduct are spelled out in two sections of Circular 230: Subpart B details duties and restrictions, and section 10.51 covers rules regarding incompetence and disreputable conduct.
By committing to these standards of professional conduct, you are protecting yourself, your reputation, and your clients from harm caused by unethical behavior. We spoke to Curt Lee, an accredited tax adviser, and business owner in Raleigh, North Carolina, who told us that tax preparers should not fear these rules. He said:
“When you voluntarily enter into the Annual Filing Season Program, it does require higher demands. Circular 230 is another set of standards you have to hold yourself to, and some people don’t understand it. When they read 230, it scares them, and they become afraid of doing something wrong. Remember, the IRS already has rules in place [for due diligence and preparer penalties], 230 is just another level.”
― Curt Lee, Owner, C B Lee & Company
“When you voluntarily enter into the Annual Filing Season Program, it does require higher demands. Circular 230 is another set of standards you have to hold yourself to, and some people don’t understand it. When they read 230, it scares them, and they become afraid of doing something wrong. Remember, the IRS already has rules in place [for due diligence and preparer penalties], 230 is just another level.”The standards of professional conduct to which AFSP tax preparers agree include:
- Be diligent in preparing accurate tax returns
- Promptly complete tax projects
- Avoid charging unconscionable fees
- Cannot notarize tax returns they prepare
- Return client’s records to the client
- Avoid conflicts of interest
- Avoid deceptive advertising
- Not to ever deposit a client’s tax refund check in the preparer’s bank account
- Follow best practices in preparing tax returns
- Avoid signing tax returns that are false or unreasonable
- Avoid giving false or misleading information to the IRS
- Avoid encouraging their clients to violate federal tax laws
- If a client hands you money for the purpose of paying the client’s taxes, pay that money promptly to the government and not steal the money
- Avoid bribing or harassing or threatening any IRS employee
- Must sign tax returns that you prepare
- Avoid preparing tax returns if one does not have a valid PTIN
Who the Annual Filing Season Program Is Right For
AFSP is right for people who want to prepare tax returns professionally and want to receive a Record of Completion from the IRS. AFSP is appropriate for people who do not already have a professional credential such as enrolled agent, certified public accountant, or attorney. These professionals are already permitted to practice before the IRS and have already demonstrated a higher level of knowledge that is required for the AFSP.
Why the AFSP IRS Certification Is Beneficial
The AFSP benefits applicants in three ways. First, AFSP Record of Completion holders are included in the public directory of tax preparers published on IRS.gov. Second, the Record of Completion demonstrates that you voluntarily took continuing education on tax topics. Third, AFSP participants can represent clients whose tax returns they prepared when dealing with IRS audits, with IRS customer service representatives, or with the Taxpayer Advocate Service.
Tax preparers benefit from having the AFSP Record of Completion along with other professional credentials because credentials visibly demonstrate your knowledge to clients and potential clients. Additionally, we spoke with Eric Hansen, an accredited tax preparer and owner of Hansen Accounting, who said:
― Eric R. Hansen, Owner, Hansen Accounting
“It’s always nice to have a third party who has put together a test, you pass the test, and you earn a professional credential that you can put on your business card and letterhead.”Additional details for the three benefits of AFSP certification include:
- Listing in tax preparer directory: AFSP participants can choose to be listed in the public directory of tax preparers published on IRS.gov; potential clients can use this public directory find you and to verify your professional credential
- Record of completion: Issued by the IRS Return Preparer Office, the Record of Completion is suitable for framing; you could also display it on your website
- Client representation: AFSP participants can deal with the IRS on behalf of clients but only if they prepared the client’s tax return; the limited circumstances where AFSP participants can represent clients are when dealing with IRS customer service, with IRS auditors, or with the Taxpayer Advocate Service.
Annual Filing Season Program Costs
The only costs for AFSP are for taking continuing education (CE) courses. Each CE provider determines fees for their courses. TheTaxBook.com, for example, offers a bundle of 20 hours of continuing education in a self-study format for $169. Fast Forward Academy, another self-study provider, charges $99 for the 18 hours of continuing education needed for the AFSP. The IRS does not charge any fee for participating in AFSP or for the PTIN.
Tax preparers can obtain their 18 hours of continuing education for free by taking classes from and volunteering for the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs operated by the IRS.
How to Get an AFSP IRS Record of Completion
There is a three-step process for getting an AFSP IRS Record of Completion. First, the IRS will send you an e-mail about a week or two after you have completed the required continuing education courses. You then log into the IRS PTIN system, consent to the Circular 230 standards of professional conduct. About 24 hours after consenting, check your mailbox on the PTIN system for your Record of Completion, which can be downloaded or printed.
If you have not received your Record of Completion, the first thing you should do is check if all your continuing education credits have been posted to the PTIN system. If any of your tax courses have not been posted, you should contact the continuing education provider to make sure you get credit for the classes you took.
Pros & Cons of the Annual Filing Season Program
Before taking investing time and effort, tax preparers should carefully evaluate whether the advantages and disadvantages of participating in the AFSP. The pros of the IRS AFSP include limited representation rights, inclusion in the public directory of tax return preparers, and recognition of your professional knowledge. Cons of the IRS AFSP include the not having full representation rights, the cost of continuing education, and the higher scrutiny that comes with the standards of professional conduct.
Pros of the Annual Filing Season Program
Benefits of the IRS AFSP include:
- Limited representation rights: You can talk to the IRS to resolve audits on tax returns you prepared and signed. Without an AFSP Record of Completion, you won’t be able to talk to the IRS to resolve audits or customer service issues relating to tax returns you prepared.
- Inclusion in the directory of tax return preparers: The IRS’s public database of tax preparers is searchable. Potential clients can search the directory to verify your professional credential.
- Recognition of your professional knowledge: AFSP participants receive a Record of Completion, which can be displayed in your office or on your website.
Cons of the Annual Filing Season Program
Disadvantages of the IRS AFSP include:
- You don’t have full representation rights: AFSP participants can represent clients only if they prepared and signed the tax return. If you want to represent clients whose tax returns you did not prepare, then the better option is to become an enrolled agent, CPA, or attorney.
- Cost of continuing education: While continuing education isn’t expensive, the costs and time commitment can still add up. Expect to spend under $200 and about 18 hours each year to meet your continuing education requirements.
- Potential fines and disciplinary action: AFSP applicants can be fined or disciplined for violating the standards of professional conduct. Fines can be as much as 100% of the income you earned by violating the standards. IRS can also suspend your credential temporarily or permanently disbar you from preparing tax returns.
Frequently Asked Questions (FAQs) About the Annual Filing Season Program
This article covers the major aspects of the AFSP. Below we highlight some of the more common questions preparers ask about the AFSP IRS program. If you have a question, feel free to post your question in the FitSmallBusiness forum, and we’ll get back to you with an answer.
How Do I Tell the IRS That I’m Applying for the AFSP?
You don’t. The IRS will reach out to you. After you complete the required continuing education and renew your PTIN, the IRS will send you an e-mail if you are eligible for the AFSP Record of Completion. That e-mail will contain instructions for how to log back into your PTIN account and complete the steps necessary for the Record of Completion.
Can an Unenrolled Tax Return Preparer Participate in the Annual Filing Season Program?
The AFSP is specifically designed for unenrolled tax return preparers to demonstrate their tax knowledge and professional ethics. An unenrolled tax return preparer is any person who is not already enrolled to practice before the IRS, which includes enrolled agents, certified public accountants, attorneys, enrolled retirement plan agents, and enrolled actuaries.
What Is an Exempt Tax Preparer?
The AFTR course is not required for AFSP applicants who meet exemption requirements. Exemptions include passing part one of the Special Enrollment Examination or being registered as a tax preparer with the states of California, Maryland, or Oregon. Exempt tax preparers need 15 hours of continuing education instead of 18 hours.
The Bottom Line
The AFSP is a voluntary professional credential issued by the IRS to tax professionals who demonstrate competency in federal tax by completing continuing education requirements. AFSP participants agree to hold themselves to the same high standards of professional conduct as enrolled agents and certified public accountants.
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