Believe it or not, taxpayers are not the only persons hurt by fraudulent or unprepared tax preparers. The IRS has an interest in weeding those people out. Every year we acquired new clients that have tax returns that were improperly prepared. Sometimes we have to amend the prior years return. One time a person came to us because their S-corporation was suspended for not filing its returns. After we checked into it, we discovered that the tax preparer had not filed ANY corporate returns from its inception. The tax preparer had been fabricating numbers from the corporation onto the client’s personal return. We had to file five years of tax returns which racked up penalties and interest.
The IRS has some good tips when reviewing a tax preparer because you are still responsible for what is on it regardless if you prepared it or not.
1. Check the preparer’s qualifications. All paid tax preparers are required to have a Preparer Tax Identification Number or PTIN. In addition to making sure they have a PTIN, ask the preparer if they belong to a professional organization and attend continuing education classes.
2. Check the preparer’s history. Check with the Better Business Bureau to see if the preparer has a questionable history. Check for disciplinary actions and for the status of their licenses. For certified public accountants, check with the state board of accountancy. For attorneys, check with the state bar association. For enrolled agents, check with the IRS Office of Enrollment.
3. Ask about service fees. Avoid preparers who base their fee on a percentage of your refund or those who say they can get larger refunds than others can. Always make sure any refund due is sent to you or deposited into your bank account. Taxpayers should not deposit their refund into a preparer’s bank account.
4. Ask to e-file your return. Make sure your preparer offers IRS e-file. Any paid preparer who prepares and files more than 10 returns for clients generally must file the returns electronically. IRS has safely processed more than 1.2 billion e-filed tax returns.
5. Make sure the preparer is available. Make sure you’ll be able to contact the tax preparer after you file your return – even after the April 15 due date. This may be helpful in the event questions come up about your tax return.
6. Provide records and receipts. Good preparers will ask to see your records and receipts. They’ll ask you questions to determine your total income, deductions, tax credits and other items. Do not use a preparer who is willing to 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. Paid preparers must sign returns and include their PTIN as required by law. The preparer must also give you a copy of the return.
10. Report abusive tax preparers to the IRS. You can 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 at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
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IRS CIRCULAR 230 NOTICE: 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.
I agree that it is very important to make sure you take the time to review your documents when filing taxes. As far as I know it is better to have them explain what they are doing in order to make any corrections as you go along. It is important to remember to consult with several companies and compare them before choosing the one to hire.
I agree that you need to check a tax preparation service’s ability before you choose them. It would seem smart to find someone who is somewhat busy but not too busy to deal with you individually. My mom needs help filing her taxes so she’ll have to find someone who is available for her to help her out.
Right now, my husband and I are looking to find someone that will be able to help take the stress out of tax preparation. We want to make sure that the person we choose will be trustworthy and will do our taxes properly. As you mentioned, we will be sure to make sure that any refund due will be directly deposited into our bank account.
That’s great, Annika. Sometimes a referral from your friends may be the best way to go. The direct deposit is not an unusual procedure. In fact, we recommend it whenever our clients are getting a refund. You can contact me at rnorris@ricknorriscpa.com if you have any more questions.
Thanks for reading and writing!
The L A CPA