By: Jay Petrillo
Tax season is in full swing. With so many tax preparers competing for your business, the IRS urges you to choose your preparer carefully.
Tax Tip 2013-07, released by the IRS on Tuesday, reminds us that even though you may choose to turn over the preparation of your return to a third party, the IRS cannot hold someone else legally responsible for what is on that return.
With that in mind, the IRS provides ten tips to help you choose your preparer.
Are they qualified?
A recent court case relaxed IRS oversight over third party preparers. The IRS can no longer require would-be preparers to submit to background checks and competency tests. Because of this, it is critical that you ensure your preparer has the experience and know-how to competently prepare your return.
CPAs, attorneys and tax lawyers all hold their own qualifications. If your preparer is not licensed under state aptitudes, ask if they at least hold title as an Enrolled Agent, an Unenrolled Return Preparer or a Registered Tax Return Preparer. Familiarize yourself with these designations.
Do a little digging
There are multiple web sites out there that may contain information about a preparer’s qualifications and history.
The Better Business Bureau may house complaints about your preparer. The individual state boards of accountancy may contain information for your CPA. The Office of Professional Responsibility lists formal disciplinary actions and censures and will advise you if the individual has been disbarred from practice before the IRS.
Ask about fees
Has your preparer promised you a bigger refund without even looking at your information? Are they charging their fees based on the size of your refund? Do they want to direct the refund deposit to their own account?
If the answer to any of the above is yes, choose another preparer.
E-file or paper file?
If you are paying for the prep of your return, your preparer should also be submitting it electronically. Why? Because the IRS requires any person who prepares more than ten returns to register with the IRS and send those returns electronically.
Here today, gone tomorrow
How confident are you that your preparer will have your back? Months down the line, if the IRS has questions about the return, is your preparer going to be around? What kind of assurances can they provide? Most reputable preparers will not charge additional amounts if the IRS has basic follow-up questions. If there is an error on your return, is your preparer going to fix it free of charge?
Back it up
All items on your return should be based on hard-copy documentation you have provided. Line entries on the return, whether they are income amounts, withholdings, deductions or exemptions, should never be “estimated.” Amounts need to be based on a W-2, not your last calendar year paystub.
Your signature
If your preparer wants to save you some time and says to go ahead and leave after signing a blank return, leave, but take everything with you!
Review
Remember, your preparer may know more about taxes, but you and only you are legally responsible for what is on that return. If you do not understand something, ask questions! Your preparer should be more than happy to walk through each item with you.
Your preparer’s signature
Make sure the preparer signs and includes their Preparer Tax Identification Number (PTIN) as required by law. Never leave until you also have a paper copy of your tax return.
Report abusive tax preparers
If you suspect your preparer is deceptive or engaged in tax fraud, report it to the IRS on Form 14157, Complaint: Tax Return Preparer. If you suspect a preparer purposely filed or altered a return for fraudulent gains, file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.
Both forms are available at irs.gov.
