Tax Preparer Bond

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What is a Tax Preparer Bond?

A Tax Preparer Bond is a type of surety bond currently required of registered tax preparers in California.

The bond is required by the California Tax Education Council (CTEC) from those who offer professional tax preparation services and aren’t exempt from the rule. Exempt preparers are California certified public accountants (CPAs), members of the state bar of California, enrolled agents, and a number of others. All other preparers must obtain the bond when registering to receive their California tax preparer license.

The Tax Preparer Bond guarantees that those who prepare other people’s tax returns will do so in an honest, diligent, and discreet manner, and in accordance with California state laws and regulations (Section 22250-22259 of the Business and Professions Code).

Since tax preparers have access to individuals’ personal and financial information, this bond guarantees their professionalism and ethical conduct when working with such information.

Like all other bonds, Tax Preparer Bonds function as an agreement between the principal (the registered California tax preparer), the obligee (the CTEC and the public), and the surety bond company that issues the bond.

If a tax preparer should mishandle the information they have access to, commit errors or omissions in their work, or not comply with California state regulations for tax preparers, the CTEC bond offers protection and financial compensation to their clients.

In such a case, the obligee may file a claim against the bond and request financial compensation for any harms caused by the preparer. The surety may then compensate the claimant for up to the full amount of the bond. The tax preparer, in return, will then have to indemnify the surety for the compensation it has paid to the obligee.

Bonding Requirements for Tax Preparer Bonds

In California, tax preparers are required to post a surety bond worth $5,000. This guarantees that up to $5,000 are made available by the surety per tax preparer. No more than $5,000 should be made available for any single tax preparer, though sureties may post up to $125,000 aggregate worth of bonds in the case of a single tax preparer employing multiple other preparers.

Questions about Tax Preparer Bonds

Who needs to obtain a Tax Preparer Bond?

California Tax Preparer Surety Bonds are necessary for licensed tax preparers in California. Individuals who are exempt from obtaining this type of bond are specified in Section 22258 of the California Business and Professions Code. All others who are not listed there as exempt must get bonded.

Which states require Tax Preparer Bonds?

Tax Preparer Bonds are not only required in California. They are also obligatory for certain types of tax preparers in Nevada, as Nevada law places them under the same regulations category as document preparers. This is true for any person who is compensated for the preparation of federal or state tax returns for the IRS.

You can learn more about Nevada requirements for document preparers, including tax preparers at the Nevada Secretary of State Website.

How much does a Tax Preparer Bond cost?

Tax Preparer Bonds can be obtained for as little as $100, for 1-5 year terms. Unlike most bonds, these bonds do not require a credit check, and are typically approved very fast for all applicants. Their bonding amount is $5,000, which is the amount of compensation a surety may extend to obligees if they file a claim against the bond.

How much is a $5,000 Tax Preparer Bond?

Unlike other surety bonds, no credit check is required for Tax Preparer Bonds. Therefore, the rates, which start as low as $100, only vary depending on the length of term for which they are required.

Can I get a Tax Preparer Bond with bad credit?

Applicants with a low or nonexistent credit score can also obtain Tax Preparer Bonds at low rates. While rates for such applicants may be higher than for those with stellar credit, Lance Surety Bonds’ Bad Credit Surety Bonds program makes it possible for them to get bonded easily and quickly.

Regardless of your credit status, Lance Surety Bonds always looks for the best possible rates for our clients. Thanks to our professional surety bond partners, all of which are A-rated and T-listed sureties, we are able to offer our clients exclusive rates on the market’s best bonds.

How to get your Tax Preparer Bond

Apply online here and submit your surety bond application form. Since these bonds are approved fast, we will contact you with your quote within a short amount of time.

To speak to one of our surety bond experts and find out more about California Tax Preparer Bonds, call us at (877)-514-5146. We can help you with your application and answer all your questions concerning bonding requirements for tax preparers.

How long does it take to become a tax preparer?

This can take between 4-6 weeks. The duration is largely affected by how long it takes you to gain the certificate of completion for your 60-hour qualifying course, and the turnaround time of your Preparer Tax Identification Number (PTIN). The latter can take up to 6 weeks if submitted on paper, but can be applied for much faster online.

How long is a Tax Preparer Bond valid?

Tax Preparer Bonds are valid for as many years as are agreed when you post your bond. This can be between 1 and 5 years.

How to renew your Tax Preparer Bond?

The surety company with whom you start your bonding process will contact you with plenty of time before your bond expires, allowing you to renew with them in due time.

Does it matter where I get my bond?

As long as you take your bond with a licensed surety company, then it doesn’t matter where you get your bond. However, Lance Surety works to secure our clients with the best rates, and you can apply for a free quote easily today.

Tax preparer license requirements and renewal

Tax preparers must fulfill a number of requirements when applying to become registered with the CTEC. These include the following:

  • Pass a 60-hour qualifying education course
  • Obtain a $5,000 Tax Preparer Bond
  • Apply for and obtain a PTIN number from the Internal Revenue Service
  • Pay a registration fee

Tax preparers must renew their CTEC registration annually, regardless of whether the length of the term of their surety bond exceeds their registration. Registration renewal is necessary in order for the surety bond to remain valid. In order to maintain their surety bond and renew their registration, tax preparers must fulfill the following renewal requirements:

  • Pass a 20-hour continuing education course
  • Renew their PTIN number annually
  • Renew and maintain their $5,000 tax preparer surety bond
  • Renew their tax preparer registration and pay a registration fee before October 31 of that year

To get started, you can apply for a bond quote today.

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Lance Surety Bonds
Lance Surety Bond Associates, Inc. is a Pennsylvania-based surety bond agency that offers bonding at competitive rates in all 50 states. Established in 2010, our company has grown to become one of the top online bond producers in the country. Working exclusively with A-rated and T-listed bonding companies gives us the confidence to offer a 100% money-back guarantee. read more

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