Rules for Tax Preparation in Nebraska

Licensing Requirement

Nebraska does not require tax preparers to gain any certification, licensing or registration. Virtually anyone can work as a tax preparer in Nebraska and in most other states. To qualify as a tax preparer for federal returns, though, you must meet federal standards, too. Beginning in 2011, the Internal Revenue Service began requiring certain standards of all tax preparers. These requirements extend to Nebraska tax preparers only if they are preparing federal taxes for clients. The IRS requires tax preparers to register with the IRS and obtain a tax preparer identification number. The IRS also conducts background checks to ensure preparers have filed all of their personal and business federal tax returns. The preparers also must have paid all of the taxes due on the returns. The IRS also requires all preparers to pass a competency test.

Some U.S. states require tax preparers to have some level of education, but no rules require tax preparers to obtain a degree in Nebraska. The federal licensing requirement of the Internal Revenue Service, however, makes it difficult for a tax preparer to obtain a license to complete federal tax returns without some education. The competency test given by the IRS makes it necessary for tax preparation companies to provide training either through in-service programs or through coursework at a local college or university. Individuals who possess a bachelor's degree in business often can pass the test with minimal review.

The Nebraska Department of Revenue has established rules about how tax preparers can file returns they have prepared. In accordance with state law, any person or business paid to prepare and file more than 100 Nebraska individual income tax returns must e-file all returns now and in the future. The electronic filing requirement reduces the delay in processing income tax returns. Tax preparers in Nebraska face possible fines and other penalties for failing to meet the electronic filing requirement.

Both federal and Nebraska state laws establish penalties for tax fraud, and these penalties apply both to taxpayers and individuals who prepare their taxes. The rules generally say that tax preparer fraud results when tax preparers are deemed guilty of preparing and filing false income tax returns for some benefit. Usually, this benefit involves the receipt of additional compensation from the taxpayer. Tax preparer fraud laws allow for both civil and criminal prosecution of tax preparers found guilty of tax fraud.