Updated August 25, 2026. Quick answer: The IRS built a licensing regime in 2011 with an exam and continuing education, and in 2014 the D.C. Circuit struck it down: the 1884 statute it relied on covers representatives who appear before the Treasury, not people who prepare returns. What survives federally is a required number and a $50-per-return penalty for not signing. Four states license preparers themselves.
What is usually said, and what the sources say
“The IRS licenses tax preparers” and “a PTIN means the IRS checked them.” The IRS did try to license preparers, in 2011, with an exam and continuing education. A federal appeals court struck the scheme down in 2014 and it has never come back.
The authority the IRS relied on is a statute from 1884 about representatives who appear before the Treasury. The D.C. Circuit held it does not reach people who prepare returns, and gave six independent reasons. What is left federally is a number you apply for and a penalty for not signing your work. A handful of states filled the gap themselves, and the IRS's own data shows exactly which ones.
The IRS tried, and lost
In 2011 the IRS built the licensing regime people assume exists. The D.C. Circuit’s opinion describes it: “the new regulations require that paid tax-return preparers pass an initial certification exam, pay annual fees, and complete at least 15 hours of continuing” hours a year (Loving v. IRS, slip op. at 1). Preparers who were not attorneys, CPAs or enrolled agents became a new category, registered tax return preparers, and nobody outside those categories could be paid to prepare a return.
Three preparers sued. In February 2014 the court held: “the IRS’s statutory authority under Section 330 cannot be stretched so broadly as to encompass authority to regulate” tax-return preparers (Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), slip op. at 3). The IRS’s own revenue procedure records the result later that year: the court “held invalid the portion of Circular 230 regulating RTRPs as practitioners practicing before the IRS. Accordingly, the RTRP program is no longer in effect.” (Rev. Proc. 2014-42, § 2).
The statute the IRS relied on, and why it did not reach
The authority was a single clause first enacted in 1884, letting the Secretary of the Treasury “regulate the practice of representatives of persons before the Department of the Treasury” (31 U.S.C. § 330(a)). The same section lets the Secretary require a representative to demonstrate “good character; (B) good reputation; (C) necessary qualifications to enable the representative to provide to persons valuable service; and (D) competency to advise and assist persons in presenting their cases.” (31 U.S.C. § 330(a)(2)).
Everything turned on one word. A representative appears for you; a preparer fills in your return and, in the ordinary case, never contacts the IRS at all. The court did not find the statute ambiguous and defer — it found “at least six considerations foreclose the IRS’s interpretation of the statute” (Loving v. IRS, slip op. at 6), the first being the meaning of the word representatives itself.
That is why the split described on the representation-rights page is not an accident of drafting. The credential that grants representation rights is the only thing the 1884 statute ever authorised the Treasury to control.
What is left federally: a number, and a penalty for hiding it
A paid preparer must have a PTIN and must put it on the return. Those are the two obligations the failed licensing regime did not take with it, and each carries a penalty in the code.
| Obligation | Statute | Penalty as written in the section |
|---|---|---|
| Sign the return you were paid to prepare | 26 U.S.C. § 6695(b) | $50 per failure, capped at $25,000 for the calendar year |
| Put your identifying number on the return | 26 U.S.C. § 6695(c) | $50 per failure, capped at $25,000 for the calendar year |
These are the amounts in the statute. Several preparer penalties are indexed for inflation by an annual revenue procedure we did not read, so the operative figure can be higher.
The signature rule is the one worth knowing as a customer. “Any person who is a tax return preparer with respect to any return or claim for refund, who is required by regulations prescribed by the Secretary to sign such return or claim, and who fails to comply with such regulations with respect to such return or claim shall pay a penalty of $50 for such failure” (26 U.S.C. § 6695(b)), and on the identifying number, “Any person who is a tax return preparer with respect to any return or claim for refund and who fails to comply with section 6109(a)(4) with respect to such return or claim shall pay a penalty of $50 for such failure” (26 U.S.C. § 6695(c)). A paid preparer who leaves the preparer box blank so the return looks self-prepared is committing the one federal preparer offence that is easy to see. It is visible on your own copy, before you file.
The voluntary programme built after the loss is the whole federal replacement: “The Annual Filing Season Program described in this revenue procedure is voluntary and no tax return preparer is required to participate.” (Rev. Proc. 2014-42, § 3). 72,049 people held a record of completion when the statistics page was last updated, out of 879,698 PTIN holders.
Four states filled the gap, and the IRS's data shows which
Nothing stopped a state from licensing preparers, and a few did. The registrations show up in the IRS’s own credential field as SRTP, which makes the map checkable rather than assertable:
| State | State-registered preparers in the extract | Statute or board read for this page |
|---|---|---|
| California | 22,286 | Cal. Bus. & Prof. Code §§ 22250–22253 |
| New York | 3,122 | New York State Department of Taxation and Finance registration page |
| Oregon | 2,149 | Or. Rev. Stat. ch. 673 |
| Maryland | 2,129 | Maryland Board of Individual Tax Preparers (Department of Labor) |
| Connecticut | 424 | not read — see below |
Every other state and territory in the extract shows fewer state registrations than Connecticut, and no statute is asserted for any of them.
Connecticut is an honest gap and worth stating precisely. Its preparers show up in the data as state-registered, so something is registering them. We could not read the statute: the General Assembly’s site returns a 404 for the chapter, and the Department of Revenue Services page we tried returns a 404 page under an HTTP 200 status, which is a failure that looks like a success. Connecticut is in the table because the IRS’s data puts it there, and its requirement is not described here because we did not read it.
What registration does and does not achieve is measurable, and the answer is smaller than the map suggests. In California, registration moves 21,430 preparers out of the no-credential column — and 58.4% still hold no federal credential. The full state-by-state count is here.
What this page does not settle
This page reads a court opinion, a statute and four states' rules. It makes no claim about whether preparers should be licensed.
The state law here is read for four jurisdictions – California, Oregon, Maryland and New York – plus one agency page. Connecticut's statute could not be read: the General Assembly's own site returns a 404 for the chapter and the Department of Revenue Services page we tried is a 404 served as HTTP 200. Connecticut appears in the data and not in the law section, and no other state's requirement is asserted here.
The registration count in the IRS data is the credential a preparer reported, not a licence we confirmed with a state board. It tracks the four registering states closely enough to be worth showing, and it is not a census of any state's licensees.
Loving was decided in 2014 and the opinion is quoted from the court's own slip opinion. Congress has been asked several times since to grant the authority the court found missing; we did not survey those bills and none is treated here as law.
The penalty figures are the amounts written into the statute. Several preparer penalties are adjusted for inflation by a yearly revenue procedure we did not read, so the operative amount for a given year can be higher than the figure in the section.
Sources
- 26 U.S.C. § 6695(b) — https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section6695&num=0&edition=prelim
- 26 U.S.C. § 6695(c) — https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section6695&num=0&edition=prelim
- 31 U.S.C. § 330(a) — https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section330&num=0&edition=prelim
- 31 U.S.C. § 330(a)(2) — https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section330&num=0&edition=prelim
- Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), slip op. at 3 — https://www.govinfo.gov/content/pkg/USCOURTS-caDC-13-05061/pdf/USCOURTS-caDC-13-05061-0.pdf
- Loving v. IRS, slip op. at 1 — https://www.govinfo.gov/content/pkg/USCOURTS-caDC-13-05061/pdf/USCOURTS-caDC-13-05061-0.pdf
- Loving v. IRS, slip op. at 6 — https://www.govinfo.gov/content/pkg/USCOURTS-caDC-13-05061/pdf/USCOURTS-caDC-13-05061-0.pdf
- Rev. Proc. 2014-42, § 2 — https://www.irs.gov/pub/irs-drop/rp-14-42.pdf
- Rev. Proc. 2014-42, § 3 — https://www.irs.gov/pub/irs-drop/rp-14-42.pdf
- IRS FOIA consolidated PTIN extract, sha256 393647afbb1d4965, fetched 2026-08-25 — https://www.irs.gov/tax-professionals/ptin-information-and-the-freedom-of-information-act
- IRS federal tax return preparer statistics, data current as of 08/01/2026 — https://www.irs.gov/tax-professionals/tax-professional-management-office-federal-tax-return-preparer-statistics
Related: How Many Paid Tax Preparers Have No Credential At All · What A Tax Preparer Credential Actually Buys You · The math error notice.
General information drawn from the federal statutes, regulations, court opinion and IRS datasets named above, not legal, tax or financial advice. Rules change and the IRS republishes these files; the figures here are what each source said on the date above, and each is linked so you can check it.
Where a preparer sits is a separate question from what a preparer is allowed to do, and the consent form that lets your return leave the country is read against the regulation on is your tax return being prepared overseas.