Tax Preparer Bonds: How to Obtain a California Tax Preparer Bond

w w w . 1 0 4 0 T a x S c h o o l . c o m
2013
Tax Preparer Bonds
How to Apply for a
California Tax Preparer Bond
Charles Davidson
ACCELERATED TAX SYSTEMS

© 2013 Accelerated Tax Systems i www.1040TaxSchool.com
Tax Preparer Bonds:
How to Apply for a California Tax Preparer Bond
Written by Charles Davidson
Published by Accelerated Tax Systems
Release Version 1.0
© 2013 Accelerated Tax Systems
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Tax Preparer Bonds: How to Apply for a Tax Preparer Bond
© 2013 Accelerated Tax Systems ii www.TaxBusinessAdvisor.com
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© 2013 Accelerated Tax Systems iv www.TaxBusinessAdvisor.com
ABOUT CHARLES H. DAVIDSON
Charles H. Davidson is a California Registered Tax Preparer
(CRTP) and a Registered Tax Return Preparer (RTRP). He is
the owner of Accelerated Tax Systems, a private company
that specializes in providing educational programs,
products, and services to the tax industry. Accelerated
Education Systems is approved by the California Tax
Education Council and the Internal Revenue Service to offer
educational programs to Enrolled Agents (EAs), Registered
Tax Return Preparers (RTRPs), and California Registered Tax
Preparers (CRTPs).
Charles holds a Master of Science degree in Higher Education from Drexel University
(2013) and a Bachelor of Arts (with distinction) from Simpson University (2003). He will
complete a Doctorate in Educational Leadership and Management from Drexel
University in 2015.
With over 10 years of experience in the tax industry, Charles is an expert in tax office
operations and consults with tax professionals who are focused on starting or growing a
tax practice. During his time in the tax industry he has worked with national tax
franchises, including H & R Block and Jackson Hewitt Tax Service, as well as small,
independent tax preparation firms. Through his tax education and training programs,
he has helped over 300 students begin a professional career in the tax industry.
From 2007 to 2009, Charles served on the Taxpayer Advocacy Panel (TAP), a federal
advisory committee with a goal of recommending improvements to IRS customer
service and programs. Appointed by Secretary of the Treasury Henry Paulson, he served
as a representative for taxpayers in California, Nevada, Alaska, and Hawaii. He was
instrumental in bringing grassroots issues to the attention of the IRS. During his time on
the panel, he served on the Small Business / Self-Employed (SB/SE) and Volunteer
Income Tax Assistance (VITA) committees, working closely with IRS program directors in
Washington, D.C.
As National Chair of the TAP, Charles met with IRS Commissioner Douglas Shulman and
National Taxpayer Advocate Nina Olson to present the TAP Annual Report and discuss
issues of concern to taxpayers. He co-authored the panel’s recommendation for
nationwide tax preparer regulation. Charles also appeared before the President’s
Economic Recovery Advisory Board to outline the panel’s recommendations for changes
to be included in President Obama’s tax reform agenda.

© 2013 Accelerated Tax Systems v www.TaxBusinessAdvisor.com
In addition to his work in the tax industry, Charles has held positions in business
education including community training, educational administration, technical writing,
and public speaking. He has given CPE-qualified presentations to local and statewide
professional organizations including the California Society for Enrolled Agents (CSEA).
He regularly appears on news programs and writes for several online blogs and websites
where he shares his expertise on tax issues.
Charles Davidson is available as a speaker or business consultant. Contact him by email
at davidson@acceleratedtaxsystems.com or by phone at 916-717-6454.
ABOUT ACCELERATED TAX SYSTEMS
Accelerated Tax Systems provides the training, products, services, and resources that
tax professionals need to start and grow a thriving tax practice. The company has built
its service model around the Five Principles of a Successful Tax Practice: regulatory
compliance; effective business models, leveraging technology, operations management,
and practice development.
Located in Sacramento, California, Accelerated Tax Systems is approved by the Internal
Revenue Service and the California Tax Education Council to offer tax education
programs for Registered Tax Return Preparers (RTRPs), Enrolled Agents (EAs), and
California Registered Tax Preparers (CRTPs).
The Accelerated Tax System network includes the following websites and products:
www.AcceleratedTaxSystems.com
www.TaxBusinessDirect.com
www.TaxBusinessAdvisor.com
www.TaxBusinessExpert.com
www.1040taxschool.com

© 2013 Accelerated Tax Systems vi www.TaxBusinessAdvisor.com
TABLE OF CONTENTS
Tax Preparer Regulation In California..................................................................... 1
How a Bond Works ................................................................................................. 2
Bond Requirements ................................................................................................ 3
When to Apply for a Bond ...................................................................................... 3
Finding a Good Bond Company .............................................................................. 3
SimpleBond.com..................................................................................................... 4
SimpleBond.com Tutorial........................................................................................ 5
Visit the SimpleBond.com Website.................................................................... 5
Select Your State ................................................................................................ 6
Bond Type .......................................................................................................... 6
Bond Term.......................................................................................................... 7
Name and Contact Information ......................................................................... 7
Reference Code and Effective Date ................................................................... 9
Billing Options .................................................................................................. 10
Credit Card Information................................................................................... 10
Receiving Your Bond ........................................................................................ 11
Need Help?............................................................................................................ 12

© 2013 Accelerated Tax Systems 1 www.TaxBusinessAdvisor.con
TAX PREPARER BONDS
HOW TO APPLY FOR A TAX PREPARER BOND
TAX PREPARER REGULATION IN CALIFORNIA
The tax preparation industry in California is regulated by the California Tax
Education Council (CTEC). CTEC sets the educational and professional
requirements that each tax preparer in the state must follow.
Tax professionals who complete the requirements to become a tax preparer in
California earn the right to use the California Tax Return Preparer (CRTP)
designation.
In order to become a tax preparer in California, you must complete the following
four steps:
 Complete a 60-hour qualifying education course offered by a CTEC-
approved educational provider;
 Obtain a Preparer Tax Identification Number (PTIN) from the Internal
Revenue Service;
 Obtain a $5,000 tax preparer surety bond; and
 Register with the California Tax Education Council.
Tax preparers must renew their registration every year which includes
completing 20 hours of continuing education and maintaining a valid PTIN and
bond.
This special report provides an overview of the bond requirements for California
as well as a detailed, step-by-step tutorial to assist you in applying for a tax
preparer bond.
More detail about the requirements to become a California Registered Tax
Preparer can be found at our website www.taxbusinessadvisor.com.

© 2013 Accelerated Tax Systems 2 www.TaxBusinessAdvisor.com
HOW A BOND WORKS
Before you apply for a tax preparer bond, you should have a basic understanding
of how the bond works. A surety bond protects the client against “damaged by
any fraud, dishonesty, misstatement, misrepresentation, deceit, or any unlawful
acts or omissions by the tax preparer” (California Business and Professions Code,
Section 22250 (b)). Tax preparers in the state of California are required to
maintain a surety bond in the amount of $5,000 at all times.
Many tax preparers falsely believe that a bond is like an insurance policy; if
there’s a claim against the tax preparer, the insurance company pays a
settlement. Rather, a bond is a promise to pay in the event a client files a claim
resulting from negligence, fraud, or other unlawful acts as described by law.
When a claim is made on a tax preparer bond, the insurance company pays the
claim amount up to the $5,000 amount posted. Unlike an insurance policy,
however, the tax preparer is liable for the amount paid. The tax preparer must
pay the amount to the insurance company or face fines or a possible law suit.
It’s important to remember: a tax preparer bond does not protect the tax
preparer; it protects the client.
As a tax preparer, you may want to purchase a
special type of insurance to protect yourself
against clients who may want to take you to
court. Errors and Omissions (E & O) insurance
protects the tax preparer if a client sues due to
a mistake or negligence.
Any claim against your bond is a serious matter. Failure to respond to inquiries
about a claim or to pay the amount required as a result of a claim could
jeopardize your bond and your career. It could also result in costly legal action.
Although claims against a tax preparer bond are rare, it’s important that you
take any claims against your bond seriously and deal with the matter promptly
so you don’t compound the problem.

BOND REQUIREMENTS
Tax professionals in California are required to maintain a tax preparer surety
bond in the amount of $5,000. Bond information must be submitted with your
application to become a CTRP.
Fortunately, bonds are easy to obtain and most can be purchased under $100
from an insurance agent who specializes in these kinds of bonds.
A bond may be valid for a period of time ranging from one year to five years. It’s
usually more cost-effective to purchase a bond for the longest period of time
allowed by the insurance company. The difference between one and two years
is negligible. A four-year bond usually costs about $95 while a one-year bond
costs $55. Buying a four-year bond instead of renewing a one-year bond every
year results in a total savings of $125.
WHEN TO APPLY FOR A BOND
While you must have your bond before you register with CTEC, you can apply at
any time. You don’t have to wait until you finish your tax education course to
apply for a bond. We recommend you apply for a bond shortly before you
complete your course so that you have all of your information handy when you
are ready to register.
FINDING A GOOD BOND COMPANY
You’ll want to find a company that specializes in these kinds of bonds. While
most insurance agents can help you, many will not be familiar with a tax
preparer surety bond. It’s not a bad idea to check with your insurance agent,
especially if you can get a good deal but be prepared to look for a specialized
bond company to avoid problems in the long run.
There are a lot of companies that offer tax preparer bonds. Although many
companies provide similar services, there are major differences including:
 Wide variety of prices. Prices for a bond range from $50 to $125. Be
sure to compare bond terms when looking at prices.

 Limited bond terms. Some companies only provide bonds for one or two
years. Try to find the longest possible term for the least amount of
money.
 Payment terms. Mailing a check to your bond company can take extra
time to process your bond. Look for a company that accepts major credit
cards. Online processing is even better.
 Delivery time. Many companies prepare bonds in their office and mail
them to you. It can take a week or more to get your bond. Try to find a
company with same-day service.
 Credit checks. Some companies may require a credit check before
issuing a bond. If you are denied a bond due to credit worthiness, you’ll
need to look for another bond company.
SIMPLEBOND.COM
At Accelerated Education Systems, we are committed to providing you with the
best products and services you need to succeed with your tax practice. For that
reason, we’ve partnered with SimpleBond.com, an online company that provides
California tax preparer bonds at a reasonable price. They do not require a credit
check and, if you purchase your bond online, you will receive your bond
information as soon as you complete your payment.
Our partnership with SimpleBond.com provides our clients with many
advantages:
 Low premiums
 Bond terms from one year to four years
 Most credit cards accepted
 Instant approval
 Same day service
 No credit checks required
We encourage you to try SimpleBond.com. The rest of this special report will
walk you through the steps to apply for a bond with SimpleBond.com.

SIMPLEBOND.COM TUTORIAL
Applying for a bond with SimpleBond.com is easy and fast. Just follow the steps
below to apply for a bond. If you pay using a credit card online, you will receive
your bond information once your payment clears.
Follow these steps to apply for a bond from SimpleBond:
1. Visit the SimpleBond.com website
2. Select your state
3. Select the type of bond you wish to purchase
4. Select the term of your bond
5. Enter your contact information
6. Enter AES as your Reference Code
7. Enter your bond effective date
Each of the steps is presented below in more detail.
VISIT THE SIMPLEBOND.COM WEBSITE
Visit www.simplebond.com and click on the Buy Bonds link to get started.

SELECT YOUR STATE
On the following screen select the state in which you reside. In this case, select
California.
BOND TYPE
Apply for a Tax Preparer Bond. This is the bond required by CTEC.
Caution: You may wish to apply for Errors and Omissions insurance at a later
time. For now, make sure you apply for a Tax Preparer Bond.

BOND TERM
On the following screen, select the term of the bond. In order to register with
CTEC, you must obtain a $5,000 tax preparer bond.
The length of the term does not matter as long as you are covered for the year in
which you prepare taxes. The annual price of a bond is less expensive when you
purchase a multiple-year bond.
Once you have selected the term of your bond, click Continue.
NAME AND CONTACT INFORMATION
On the following screen enter your name as it should appear on the bond.
Enter your contact information.
Note: Be sure to enter a valid email address. Once you have completed your
bond application, a copy of your bond will be sent to your email address.
When you are finished entering in your contact information, click Continue.

On the following screen, enter your mailing address and physical address. Click
Continue when you are finished entering your information.

REFERENCE CODE AND EFFECTIVE DATE
Important: On the following screen, enter AES as the Reference Code. This
identifies you as a client of Accelerated Tax Systems.
Enter the date you would like the bond to become effective. You may enter the
current date or a future date (such as January 1).
Note: Don’t backdate your bond unless you have a very good reason. For
example, your previous bond has expired and you don’t want a lapse in
coverage.
Enter any additional comments you may have and click Continue.

BILLING OPTIONS
Select your billing option. You can choose to pay with a credit card or you can
have an agent from SimpleBond contact you to discuss billing options. Click
Continue when you have made your choice.
Note: If you pay with a credit card, you will receive your bond immediately after
you submit your application.
CREDIT CARD INFORMATION
Enter your credit card information and billing address. Click Continue to submit
your application.

RECEIVING YOUR BOND
Your bond will be emailed to the address you provided. You will not receive a
hard copy of your bond in the mail.
Print a copy of your bond for safekeeping.
FIGURE 1. SAMPLE BOND

NEED HELP?
Accelerated Tax Systems is a full-service company that assists tax professionals
with starting and growing their tax practice.
Want it done for you? We can apply for your bond and assist you with
completing any other state or federal applications required to start your tax
practice. Simply give us a call at 916-717-6454 or visit us at
www.taxbusinessdirect.com.

Tax Preparer Bonds: How to Obtain a California Tax Preparer Bond

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