Tax Preparer Bond Requirements
To act as a tax preparer in your state, you may need to obtain a tax preparer bond. Tax preparers are hired by people to prepare their tax returns in a professional manner, and in accordance with all state and federal requirements.
In some states, such as Nevada, tax preparers are considered “document preparation services” businesses.
Currently, to act as a tax preparer in California or Nevada, individuals must post either a California tax preparer bond or a Nevada tax preparer bond.
Why Do I Need This Bond?
This bond serves as a guarantee that you will comply with the rules and regulations of your state when preparing tax returns. For example, such regulations include the California Business and Professions Code 22250-22259 or the Nevada Revised Statutes Chapter 240A.
This bond is necessary because tax preparers handle people’s personal and financial information. It protects people from any losses or damages as a result of fraud, misstatement, dishonesty, or other illegal acts on behalf of a tax preparer.
When someone suffers losses as a result of such actions, they may file a claim against the tax preparer bond to receive compensation. The surety company will then investigate the claim and determine whether to issue compensation to the claimant.
If the surety extends compensation to a claimant, it may be as much as the full penal sum of the surety bond.
Is this your first time getting bonded? See our ‘What is a surety bond’ guide for a full explanation of how bonds work and why you need one!
If you have any questions about getting this type of bond, call us at 866.450.3412 anytime!
To learn more about the bonding requirements for tax preparers in your state, select your state on the map below.
Choose Your State
- Select your state
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- Washington D.C.
- West Virginia
- Wisconsin
- Wyoming
How Much Does It Cost to Get a Tax Preparer Bond?
Tax preparer bonds’ cost depends on their amount and your personal financials. Each state has a different requirement for the amount, or penal sum, of the tax preparer bond.
- In California, applicants for a tax preparer bond registration must obtain a $5,000 bond.
- In Nevada document preparation services businesses must post, at minimum, a $25,000 bond and up to $200,000, depending on the number of registrants that the business employs.
To get this type of bond, you must pay a surety bond premium. Your surety company determines your bond premium based on several financial factors.
Factors That Determine Your Bond Premium
Applicants’ personal credit score is the primary factor that influences the bond premium.
High credit scores are considered an indicator of financial stability and applicants with high scores can expect to get bonded at some of the lowest possible scores.
Applicants with lower or bad credit scores will typically be offered higher rates but the exact rate depends on their particular score.
Along with your credit score, sureties will usually also want to have a look at additional information about your financials. This may include:
- Personal and business financial statements
- Fixed and liquid assets
- Work experience and record
If you’d like to know more about how your bond premium is determined by the surety, see our detailed surety bond cost guide!
How Can I Get a Tax Preparer Bond?
To apply for your tax preparer bond, click on the banner below and complete and submit the bond form. You will then receive a free quote on your bond along with more information about the bonding process.
Do you have any questions about the bonding requirements for tax preparers in your state? Call us at 866.450.3412!
