What is Preparer due diligence?
By Haresh Ratnagrahi, Founder, HiPrep (CPA, FCA, CMA (US), CISA, CRISC)
Definition
The duty of a tax preparer to take reasonable steps to confirm that claims on a return are accurate, especially for certain credits, and to keep records of those steps.
Where Preparer due diligence matters
CPA (US): The global gold standard for accounting and audit. 4 Exams: 3 Core + 1 Discipline; 4 hrs Per section; 75 Passing score (0–99 scale); Prometric Test centres worldwide. Parts: FAR Financial Accounting & Reporting; AUD Auditing & Attestation; REG Taxation & Regulation.
CMA (US): The credential for management accounting and finance leadership. 2 Exam parts; 4 hrs Per part: 100 MCQs + 2 essays; 360 Passing score (0–500 scale); 3 yrs To complete both parts from your first. Parts: Part 1 Financial Planning, Performance and Analytics; Part 2 Strategic Financial Management.
Enrolled Agent (EA): The fastest route to practising US tax. 3 Exam parts (SEE); 3.5 hrs Per part: 100 MCQs; 105 Passing score (40–130 scale); 2 yrs To pass all three parts. Parts: Part 1 Individuals; Part 2 Businesses; Part 3 Representation, Practices and Procedures.
Related terms explained
Circular 230: The IRS regulations governing practice before the IRS and the duties of tax practitioners. It features heavily in EA Part 3 and in CPA REG ethics.
Enrolled Agent: A US tax professional licensed by the IRS with unlimited rights to represent taxpayers before the IRS. You earn it by passing the SEE and a suitability check. No degree is needed.
Guides that mention it
EA Part 3 study guide: Representation, Practices and Procedures: EA Part 3 covers practices before the IRS, representation, examinations, appeals, collection and the filing process. It is rule-heavy and less computational, so focus on Circular 230, authorisation forms and taxpayer rights.
How HiPrep teaches it
In HiPrep, Preparer due diligence is taught concept-first and then practised in a Prometric-style simulator. Every answer is built step by step so you see how a result is reached, explanations are available in English, Hindi, Tamil, Telugu and Kannada, and a mentor is behind the platform for doubts. Start with the free diagnostic to see where Preparer due diligence sits in your plan.