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 all tax preparers who prepare taxes professionally and aren’t exempt from the rule. Exempt preparers are California certified public accountants, California State Bar attorneys, 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 in their work, or not comply with California state regulations for tax preparers, the surety 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.
Questions about Tax Preparer Bonds
Who needs to obtain a tax preparer bond?
Tax preparer 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.
Are there different types of tax preparer bonds?
No, there are no varieties of tax preparer bonds. These bonds may be obtained for different terms, but do not differ in their function or purpose.
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.
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.
Tax preparer license requirements and renewal
Tax preparers must fulfil 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 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 fulfil 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