To become a tax preparer in Arkansas, you need a federal Preparer Tax Identification Number from the IRS, a local business permit, and — if you plan to file returns electronically — a separate IRS e-file authorization. Arkansas does not issue its own tax-preparer license and requires no exam or degree, so the barrier to entry is lower than many people expect. The catch is that once you start preparing returns for pay, a substantial body of federal rules on due diligence, ethics, and data security applies to you, and Arkansas layers on its own record-retention requirement.
Get Your PTIN First
Every person who prepares or helps prepare a federal tax return for pay must have a PTIN, and you have to include that number on every return you sign for a client.1Office of the Law Revision Counsel. 26 U.S. Code 6109 – Identifying Numbers There is no test, no education prerequisite, and no waiting period.
The fastest way to apply is through the IRS online PTIN system. You create an account, verify your identity with your Social Security number, confirm you are current on your own personal tax obligations, and pay the $18.75 non-refundable fee.2Internal Revenue Service. IRS Reminds Tax Pros to Renew PTINs for the 2026 Tax Season Most first-time applicants get their number as soon as the payment clears. Paper Form W-12 works too, but that route takes about six weeks.3Internal Revenue Service. PTIN Requirements for Tax Return Preparers
Your PTIN expires every December 31. Renewal costs the same $18.75 and happens each fall before the upcoming filing season. If you let it lapse, you cannot legally prepare returns for compensation until you reactivate it.
The penalties for skipping this step are real. Filing a return without your PTIN carries a $65 penalty per return for returns filed in 2026, capped at $32,500 per year. The same $65 applies if you fail to sign a return you prepared or fail to give the client a copy.4Internal Revenue Service. Revenue Procedure 2024-40 Those amounts are adjusted for inflation each year.
Add an EFIN If You’ll File Electronically
A PTIN lets you prepare and sign paper returns. To transmit returns electronically, you also need an Electronic Filing Identification Number, and since almost all returns are now e-filed, most preparers apply for both at once.
The EFIN application goes through the IRS e-services portal. You supply your PTIN, personal information, and professional background, including any prior felony convictions or tax-compliance issues. If you are not a CPA, attorney, or enrolled agent, you also complete a fingerprinting appointment through the IRS-authorized livescan vendor; the portal generates a scheduling link after you submit.5Internal Revenue Service. Become an Authorized E-File Provider Plan for up to 45 days from submission to acceptance letter, so apply well before tax season. You can still prepare paper returns with your PTIN while you wait.
You are not free to stay on paper indefinitely. Once you reasonably expect to file 11 or more individual income tax returns in a calendar year, federal law requires you to e-file all of them.6Internal Revenue Service. E-File Requirements for Specified Tax Return Preparers Arkansas does not impose its own e-file mandate on preparers, so this federal threshold is the one to plan around.
Register Your Business in Arkansas
Because Arkansas has no dedicated tax-preparer license, the state-level setup is the same as for any professional service business. A few pieces need attention:
- A general business permit from the city or county clerk where you plan to operate. Fees and renewal schedules vary by jurisdiction, so check directly with the clerk’s office.
- State tax registration through the Arkansas Taxpayer Access Point (ATAP) if you hire employees or owe sales tax on any services. The Department of Finance and Administration administers state tax law and oversees these accounts.7Justia Law. Arkansas Code 26-18-301 – Duties of Secretary
- State e-file registration with DFA if you plan to submit Arkansas income tax returns electronically. This is separate from your federal EFIN.
None of these require an exam or particular educational background. They are administrative steps, but skipping them can get filings rejected or leave you operating without a required permit.
Consider the Annual Filing Season Program
A PTIN gives you the legal right to prepare returns. It does not put you on the IRS’s public directory of preparers with credentials, which prospective clients use when comparing options.8Internal Revenue Service. FAQs Directory of Federal Tax Return Preparers with Credentials and Select Qualifications The quickest way onto that list, short of becoming a CPA, attorney, or enrolled agent, is the Annual Filing Season Program.
The AFSP requires 18 hours of continuing education each year from an IRS-approved provider: a 6-hour Annual Federal Tax Refresher course ending in a timed comprehension test, 10 hours of federal tax law topics of your choosing, and 2 hours of ethics. You also need an active PTIN and must consent to follow the practice standards in Subpart B of Treasury Department Circular 230.9Internal Revenue Service. General Requirements for the Annual Filing Season Program Record of Completion Once you meet the requirements and renew your PTIN for the coming year, the IRS issues your Record of Completion.
The credential also changes what you can do when a client’s return runs into trouble. Unenrolled preparers without a Record of Completion cannot represent anyone before the IRS, regardless of who prepared the return.10Internal Revenue Service. Instructions for Form 2848 – Special Rules and Requirements for Unenrolled Return Preparers With the AFSP, you can represent clients whose returns you personally prepared and signed during an examination, but only before revenue agents and customer service representatives. Appeals officers, revenue officers, and IRS counsel remain off-limits, and you cannot sign documents for a client or extend statutory deadlines.11Internal Revenue Service. Publication 947 – Practice Before the IRS and Power of Attorney Full representation rights require becoming a CPA, attorney, or enrolled agent.
Rules You Must Follow Once You’re Preparing Returns
Due Diligence on Common Credits
Preparing a return is not just about entering numbers. Federal law imposes specific due diligence steps when a return claims the Earned Income Tax Credit, Child Tax Credit, Additional Child Tax Credit, Credit for Other Dependents, American Opportunity Tax Credit, or head-of-household filing status. For each of these, you must complete Form 8867 (the Paid Preparer’s Due Diligence Checklist), compute the credit using the required worksheets, evaluate the information the client gives you and follow up on anything inconsistent, and keep the checklists, worksheets, and interview notes for three years.12Internal Revenue Service. Due Diligence Law, Regulations and Requirements
Missing any of these steps on a single return triggers a $650 penalty for returns filed in 2026, with no annual cap.13Internal Revenue Service. Consequences of Not Meeting the Due Diligence Requirements These credits are extremely common on lower-income returns, so the exposure adds up quickly.
Ethics Under Circular 230
Treasury Department Circular 230 sets baseline conduct rules for everyone who practices before the IRS, including unenrolled preparers who consent to it through the AFSP. You must exercise due diligence in preparing returns and verifying what you tell clients or the IRS. If you discover a client has made an error or omission on a previously filed return, you have to notify the client promptly. You cannot represent two clients whose interests conflict unless both give informed, written consent, and those consents must be kept for at least 36 months. Violations can result in censure, suspension, or permanent disbarment from practice before the IRS.14Internal Revenue Service. Treasury Department Circular No. 230
Client Data Security
Tax preparers handle Social Security numbers, bank details, and full income records. Federal law treats you as a financial institution under the Gramm-Leach-Bliley Act, which brings two FTC rules into play.
The Privacy Rule requires you to give each new client a written notice describing how you collect, use, and share their personal financial information, plus an opt-out notice and a reasonable way to exercise it if you share data with nonaffiliated third parties outside narrow exceptions. Clients get an updated privacy notice every year the relationship continues.15Federal Trade Commission. How to Comply with the Privacy of Consumer Financial Information Rule of the Gramm-Leach-Bliley Act
The Safeguards Rule requires a written information security program that protects client data from unauthorized access.16Federal Trade Commission. FTC Safeguards Rule: What Your Business Needs to Know For a small tax office that means encrypted client files, multi-factor authentication on your tax software, secured paper documents, and training for any staff. These rules are not optional, and a breach without a compliant plan can bring FTC enforcement on top of the reputational damage.
Arkansas Six-Year Record Retention
Arkansas requires all records used in connection with preparing a return to be preserved for six years after the return is filed. That includes books of account, receipts, invoices, schedules, and working papers, and the Secretary of the DFA can examine them at any reasonable time during that period.17Arkansas Code of Rules. 26 CAR 100-110 – Preservation of Records by Taxpayer – Arkansas Code 26-18-506 The federal three-year retention rule for due diligence records runs alongside it, so keeping everything for six years satisfies both.
Consider Professional Liability Insurance
Arkansas does not require tax preparers to carry errors-and-omissions insurance and imposes no surety bond requirement. Even so, one miscalculated return that costs a client a large penalty or an unexpected tax bill can generate a claim against you. Annual premiums for tax-preparer professional liability coverage generally run from a few hundred dollars to around $700, depending on limits and client volume. For a solo practitioner, it is one of the more affordable protections against a mistake that would otherwise be financially devastating.
If You’ll Offer Refund Anticipation Loans
Not every preparer offers these products, but if you do, Arkansas layers on unusually specific disclosure rules. You must display a fee schedule in your office showing interest-rate examples for loan amounts of $250, $500, $1,000, and $2,500, printed in at least 28-point type on a poster measuring at least 16 by 20 inches. The poster must prominently notify clients that they are borrowing against their refund and can usually receive it faster without the loan and its extra fees. Each applicant then gets a separate written disclosure on colored paper in 14-point type stating the total fee, the interest rate, and that the product is a loan. If a client primarily communicates in a language other than English, the disclosures must be provided in that language too.18Arkansas State Legislature. Act 1402 – Refund Anticipation Loan Act The formatting requirements are strict, and noncompliance creates liability the fees rarely justify.