Any person engaging in preparing tax for payment of a fee is required to possess a California Tax Preparer Bond. It is a surety bond whose possession is compelled by the California Tax Education Council.
Requirements
Once the application has been filled out and the fee is paid: a meagre $100 bond fee, the bond will be issued to you immediately. There are no requirements to show your tax returns, income slips or any balance check. Furthermore, there is no need for a separate background check.
The Necessity of one
Often acts of maliciousness, malfeasance, wilful negligence and dishonesty, by the tax preparer can harm the interests of the public. Thus, the California Tax Education Council requires the bond for protecting the public; it’s an assurance in lieu of the public by the tax preparer. In layman’s terms, it’s a guarantee that the tax preparer will buy for her/his customer.
Additional Safety Nets
Purchase of an Errors and Omissions insurance policy is strongly recommended because the tax preparer surety bond is issued as a primary safety net for the customers. If any illegal activity is executed by the employee of the tax preparer the Errors and Omission Policy shall protect the tax preparer from the consequences. In a conventional sense, the Errors and Omissions policy is an insurance policy of sorts. The California Tax Education Council does not require the additional purchase of an Error and Omissions Policy (E&O) along with the California Tax Preparer Bond, however, the price of the E&O policy is so mere compared to the price of the surety bond that the dual purchase is recommended and you can never be too safe, right?
Once the bond is purchased, it needs to be filed with the California Tax Education Council and you’re good to go.