Many people don’t deal with their tax return preparation themselves. The reasons vary – fear of being audited, not understanding taxes, no time to go through the process, and other reasons. Whatever the case, some patience should be used when picking a tax preparer. Remember, despite a preparer being certified to do your taxes, you are still ultimately the final stop for accountability on you filings. A tax preparer does not let you off the hook for filing bad information.
Most tax preparers have been in the business for quite a while if they are established. They understand the liabilities and implications of filing bad tax returns probably better than most of the people they work for. They also understand they too can go to jail for filing false claims on behalf of someone. So most preparers are not in the business of doing a bad job. That said, hiring someone to work on your financial affairs still requires some research if you want to do it right.
First, you want to make sure your prospective tax preparer keeps up with the tax law changes. Like other professions, there are ongoing education programs and professional affiliations preparers can be part of to meet this need. As a tax filer you want to work with a preparer who makes this commitment professionally known. Second, you only want to work with preparers who have a Preparer Tax Identification Number (PTIN) from the IRS. This is required for legal preparers as of 2011.
Doing background checks and referrals is not a bad idea either. If you are considering a specific preparer, find out who else has used that person’s service and if the results were satisfactory. You can also find out if there are complaints against the preparer by contacting your local Better Business Bureau for any records on the matter. Don’t forget the Internet either. Many times, through social sites or the newly-appearing vendor recommendation websites such as Yelp or similar tax preparers with customer service issues get named and can be spotted quickly for free. Finally, any disciplinary measures will likely pop up in your state board for accountancy, the state bar, or with the IRS itself. All of the agencies have contacts for checking out a preparer before use.
When discussing fees, a tax preparer should be able to give you a flat fee for your type of taxes. In other words, there should be one fee to do a basic 1040EZ filing and another fee to do a more complicated 1040 filings with self-employment and capitals gains details. Steer away from anybody who wants to work on a percentage basis, charging a portion of your tax refund and pushing a tax refund loan in the meantime. This is just a racket for high-interest lending.
You also want to look for a tax preparer who will be around when you have questions or need to respond to the IRS in a review or audit. A preparer doesn’t do you much good if they disappear and close up shop a day after April 15th. This sort of behavior is becoming more common, even among corporate tax preparation companies that temporarily rent out offices in shopping malls and then close up by May.
If you’re working with a tax preparer and she has not interest in looking at or seeing any of your documentation while going through your taxes, that’s a red flag. It’s a preparer’s job to make sure the documentation exists to validate an answer on a tax form. If they’re not checking, they’re making up the answer as they go which is illegal.
When the forms are completed (don’t ever sign off on a blank form) make sure the preparer has already provided his PTIN number and signed the forms before you do. Get a copy of the forms for your own personal records, even if the preparer promises to provide you one anyways.
If you find yourself having a serious problem with a preparer and don’t know where to go, you can connect directly with the IRS. This protects you in two ways. First, you are on record that you spotted and reported the problem rather than the IRS finding it in your records. Second, the IRS will step in and take on the enforcement rather than your having to rely on civil means to do so. Contacting the IRS directly can be done by filling out Form 3949-A – Information Referral or by writing your own communication to the IRS at their address, Internal Revenue Service, Fresno, CA 93888. The form can be downloaded electronically from the IRS website at www.IRS.gov or by calling 800-TAX-FORM (800-829-3676).
IRS – New PTIN Requirements (http://www.irs.gov/taxpros/article/0,,id=210909,00.html)
IRS – e-Services for Tax Pros (http://www.irs.gov/taxpros/article/0,,id=109646,00.html)
IRS – Where to Report Suspected Tax Fraud (http://www.irs.gov/individuals/article/0,,id=106778,00.html)