Paid Preparer Signature

[JohnH]

I prepare several returns which I consider "charity" cases, along with some family members whom I don't charge. In past years I would sign the "Paid Preparer" line and fill in the info just as a matter of habit. However, this year I decided to stop doing that and just fill in the info & sign on returns I actually charge to prepare. These are all individual income tax returns (not business clients for whom I'm doing other paid work on a corporate return, payroll tax reports, etc). Keep in mind that all my returns are paper filed, so I have no indirect connection to the process of actually filing the return.

Now I have another category of return. I'm cutting loose some clients after this year and there are a few of them among the returns I'm finishing up between now and Oct 15. As a courtesy, I'm not charging for their work this year. A strict interpretation of the "Paid Preparer" designation would say I don't need to sign because I'm not being paid. However, does the fact that I have been paid to prepare their returns over the past 2-5 years have any bearing on the definition of "Paid Preparer" in the current year? Does history have any bearing on whether I'm a paid preparer, or is it a return-by-return definition with each year standing on its own? I'd appreciate anybody's thoughts on this question.

[AJsTax]

My opinion

without anything to back it up other than experience and some understanding of the rules is that the paid preparer would have to go with each tax return filed. The authorizations that come with signing a return do not carry over to any other return and the right to discuss the return through the signing authorizations expire after one year, so it should follow the requirement to sign the return should only hold to the current return.
The explanation in the regs state that if you are not paid to prepare a return you should not sign it. I do not recall reading any exceptions to that.

[taxxcpa]

Paid Preparer

This could be interpreted two ways:
[1] You are not a paid preparer unless you are paid to prepare the specific return.
[2] You ARE a paid preparer if you get paid for ANY returns that you prepare.

[solomon]

§301.7701-15(f) delineates who is not considered a tax preparer. Among these is:

(xii) A person who prepares a return or claim for refund for a taxpayer with no explicit or implicit agreement for compensation, even if the person receives an insubstantial gift, return service, or favor.

This does not seem to indicate a dual interpretation - rather it is on an individual basis with no historical context.

[taxea]

if you get paid for the return, sign it
if not, don't sign it but be sure you select self-prepared in your program

[Gene V]

if you get paid for the return, sign it
if not, don't sign it but be sure you select self-prepared in your program

my program has the option of self-prepared or non-paid preparer

[JohnH]

I use ATX, and I just set up a second paid preparer line with no entries on any of the boxes. I then tell it to enter that preparer on returns I don't intend to sign. The logistics are easy, I'm just verifying my understanding of some of the rules. (Still considering getting the number down to under 100 for next tax season) Thanks for all the perspectives.