How to Pick A Tax Preparer

Unfortunately over the last two decades as a CPA I have amended tax returns that other non-qualified “professionals” had prepared, sometimes amounting to large penalties and interest.  Though there are a few “types” of tax preparers, a CPA is versed in other areas.  For example, if you have a business, a CPA can help you with most aspects of that business and how it relates to your individual tax return.  A CPA also will probably have referrals for other aspects of your business life, like insurance, financing, banking, etc.

The IRS came out with some guidelines to use when picking a qualified tax preparer. Use it as a checklist that will help you protect yourself.

1. Check the Preparer’s Qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications on IRS.gov. This tool can help you find a tax return preparer with the qualifications that you prefer. The Directory is a searchable and sortable listing of certain preparers registered with the IRS. It includes the name, city, state and zip code of:

• Attorneys.
• CPA s.
• Enrolled Agents.
• Enrolled Retirement Plan Agents.
• Enrolled Actuaries.
• Annual Filing Season Program participants.

Attorneys, CPA s and enrolled agents can represent any client before the IRS in any situation. However, new rules apply to the rights of non-credentialed tax preparers to represent their clients before the IRS. Non-credentialed preparers without an Annual Filing Season Program – Record of Completion – may only prepare tax returns. The new rules do not allow them to represent clients before the IRS on any returns prepared and filed after December 31, 2015. Annual Filing Season Program participants can represent clients in limited situations. For more, visit IRS.gov and see the Understanding Tax Return Preparer Credentials and Qualifications page.

2. Check the Preparer’s History. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPA s, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory.
3. Ask about Service Fees. Avoid preparers who base fees on a percentage of their client’s refund. Also avoid those who boast bigger refunds than their competition. Make sure that your refund goes directly to you – not into your preparer’s bank account.
4. Ask to E-file Your Return. Make sure your preparer offers IRS e-file. Paid preparers who do taxes for more than 10 clients generally must file electronically. The IRS has safely processed more than 1.5 billion e-filed tax returns.
5. Make Sure the Preparer is Available. You may want to contact your preparer after this year’s April 18 due date. Avoid fly-by-night preparers.
6. Provide Records and Receipts. Good preparers will ask to see your records and receipts. They’ll ask questions to figure your total income, tax deductions, credits, etc. Do not use a preparer who will e-file your return using your last pay stub instead of your Form W-2. This is against IRS e-file rules.
7. Never Sign a Blank Return. Don’t use a tax preparer that asks you to sign a blank tax form.
8. Review Your Return Before Signing. Before you sign your tax return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it.
9. Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number, or PTIN. By law, paid preparers must sign returns and include their PTIN. Be sure you get a copy of your return.
10. Report Abusive Tax Preparers to the IRS. Most tax return preparers are honest and provide great service to their clients; however, some preparers are dishonest. Report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. You can get these forms on IRS.gov at any time.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:

• Tax Topic 254 – How to Choose a Tax Return Preparer
• Choosing a Tax Professional
• How to Make a Complaint About a Tax Return Preparer
• How to Report Suspected Tax Fraud Activity

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IRS CIRCULAR 230 DISCLAIMER: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, (Firm) would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.