Handling "no fee" returns as preparer

[BobinNJ]

How do I set up the preparer for an unpaid return which I want to e-file?

[kcjenkins]

If you are going to efile it, you need to be on the efile info. I don't know of any way to efile without using your ERO info etc. How much you charge, is your business, and has nothing to do with it.

[Jack from Ohio]

If my fees are $0, I still file as the paid preparer. The IRS does not care. The possible downside is that you are still "responsible" as the paid preparer even if done for $0.

[OldJack]

paper file.

[JohnH]

Given the risks associated with filing any tax return, I think it's worth the trouble to paper file and omit the "Paid Preparer" info when the return is prepared at no charge.

[SunTaxMan]

Every conversation I have had with IRS personnel and instructors who teach the various seminars would indicate that IRS "has ways of determining if a return was professionally prepared and WHO prepared it." Thus, no named preparer on a return that comes out of my computer would be a mistake - even if paper filed. No?

[Jack from Ohio]

Please explain the reasons why you all seem to not want anyone to know that you prepared any given return whether you were paid or not??

Do you do them less "correctly" if you don't get paid? I strive to be too much the informed and experienced professional to run and hide...

[JohnH]

No, it would not be a mistake. This isn't a question of concealment - it's a question of doing what one is required to do. We are required to sign any return we prepare for compensation as the "Paid Preparer". No compensation, no paid preparer.

[OldJack]

@Jack from Ohio: What is there about signing where it says "Paid" preparer that you don't understand?

edit: In other words if you are not paid you should not sign!

[JohnH]

Also, what is it about my last comment that you don't understand?

[jainen]

>>the informed and experienced professional<<

>>if you are not paid you should not sign<<

I'm between the two Jacks on this. I don't know if I can sign a pro bono return, but I do know I should sign it.

Although "tax preparer" is defined in the Code in terms of compensation, Circular 230 spins it around. It doesn't mean that you aren't a tax preparer if you don't get paid. You aren't allowed to get paid unless you are a "practitioner" with a PTIN. And only a lawyer, accountant, EA, or RTRP can get a PTIN. But we are all subject to the same standards of practice, even unlicensed persons who charge illegally. The definition of "practitioner" subject to Circular 230 does not depend on compensation.

There's also a difference between a preparer and an ERO. It is still possible for you to e-file a return that was not signed by a paid professional. Only thing you can't do is drop the envelope in the mail for a client. You have to either e-file any tax return in your hands, or give it to the client.

[JohnH]

The following paragraphs from the current version of Pub 17 might also be informative with respect to the IRS position, although I've seen at least one interpretation of the last sentence which tries to conclude it doesn't apply to anyone with a PTIN (I thought the reasoning was more than a little fanciful):

"Generally, anyone you pay to prepare, assist in preparing, or review your tax return must sign it and fill in the other blanks, including their Preparer Tax Identification Number (PTIN), in the paid preparer's area of your return.

Many preparers are required to e-file the tax returns they prepare. They sign these e-filed returns using their tax preparation software. However, you can choose to have your return completed on paper if you prefer. In that case, the paid preparer can sign the paper return manually or use a rubber stamp or mechanical device. The preparer is personally responsible for affixing his or her signature to the return.

If the preparer is self-employed (that is, not employed by any person or business to prepare the return), he or she should check the self-employed box in the Paid Preparer Use Only space on the return.

The preparer must give you a copy of your return in addition to the copy filed with the IRS.

If you prepare your own return, leave this area blank. If another person prepares your return and does not charge you, that person should not sign your return."