Tax Time, Choose Wisely young Padawan

It’s Tax Time! Choose a Tax Preparer Wisely my Friend!

Not all Tax Preparers are actually Tax Professionals!

Talk is cheap, don’t believe everything your told!

Trust, but always verify!

What kind of tax preparer do I need?

Believe it or not, you don’t need any qualifications to prepare taxes or to call yourself a tax preparer or even a Tax Professional!

Anyone can be a paid tax return preparer as long as they have an IRS Preparer Tax Identification Number (PTIN). However, tax return preparers have different levels of skills, education and expertise.

There are various types of qualified tax return preparers, including enrolled agents (EA), certified public accountants (CPA),  attorneys, and many others who don't have a professional designation.

You should expect your tax preparer to be skilled in tax preparation and to accurately file your income tax return.

You trust the tax preparer with your most personal information. They know about your marriage, your income, your children and your social security numbers – the details of your financial life.

National Firms, how do they measure up?

Many National firms have part-time seasonal preparers who rely on computer programs to guide them through the tax preparation process. If you have a basic tax return, they are probably fine, or you might be able to use one of the online programs yourself.

Experience, education and training are not the type of skills you get from taking a short online tax course.

Online Programs, how good are they?

The problem with the do-it-yourself tax programs, the output is only as good as the information you input. If you don’t understand the questions and enter the wrong information, the program will still calculate the output regardless of its accuracy.

For complicated tax returns, you want a Qualified, Experienced and Educated Tax Professional who does tax returns for a living, not a part-timer.

What kind of tax preparer do I need?

I have provided some basics at the end of the blog about tax preparer Credentials and Qualifications.

Regardless of who prepares the tax return remember you are responsible for its accuracy. When you sign the tax return you attesting to the accuracy under penalty of perjury.

Here are some tips to remember when selecting a preparer:

Check the preparer's qualifications. 

Remember even credentials don’t guarantee an experienced or qualified tax professional.

Check the preparer's history.

Do an online search for reviews. Google, bing, yelp. Also check for complaints.

Ask about service fees.

Avoid preparers who Guarantee a refund or base their fees on a percentage of the refund or who boast bigger refunds than their competition.

Ask to e-file.

Almost all return can and should be e-filed, if the preparer will not be e-filing your return, choose another preparer.

Make sure the preparer is around year-round.

Will you be able to reach the tax preparer if there are issues with your tax filing after April 15?

Don’t sign a blank return.

You should not sign a blank tax return. You can’t verify what is going to be filed.

Review your tax return before signing.

Ask the tax preparer to explain what is on the tax return before you sign it. Review the return and get a basic understanding of what is on it. Ask questions if something is not clear to you. You should feel comfortable with the accuracy of your tax return before you sign it.

Review direct deposit or direct debit information.

Confirm the routing number and bank account number on your tax return is correct.

Did the tax preparer sign the return and include their PTIN.

All paid tax preparers must have a Preparer Tax Identification Number. By law, paid preparers must sign returns and include their PTIN on the return they file. The taxpayer's copy of the return is not required to have the PTIN on it.

What is a ghost preparer

A ghost preparer is someone who doesn't sign tax returns they prepare. Unscrupulous ghost preparers often print the return and have the taxpayer sign and mail it to the IRS. For electronically filed returns, a ghost preparer will prepare the tax return but refuse to sign it as the paid preparer.

Guidance on credentials and qualifications of tax professionals

Considering a tax professionals credentials. Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in tax matters.

Unlimited Representation Rights: Enrolled agents, certified public accountants, and attorneys have unlimited representation rights before the IRS. Tax professionals with these credentials may represent their clients on any matters including audits, payment/collection issues, and appeals.

• Enrolled Agents – Licensed by the IRS. Enrolled agents are subject to a suitability check and must pass a three-part Special Enrollment Examination, which is a comprehensive exam that requires them to demonstrate proficiency in federal tax planning, individual and business tax return preparation, and representation. They must complete 72 hours of continuing education every 3 years.
   
• Certified Public Accountants – Licensed by state boards of accountancy, the District of Columbia, and U.S. territories. Certified public accountants have passed the Uniform CPA Examination. They have completed a study in accounting at a college or university and also met experience and good character requirements established by their respective boards of accountancy. In addition, CPAs must comply with ethical requirements and complete specified levels of continuing education in order to maintain an active CPA license. CPAs may offer a range of services; some CPAs specialize in tax preparation and planning.
   
• Attorneys – Licensed by state courts, the District of Columbia or their designees, such as the state bar. Generally, they have earned a degree in law and passed a bar exam. Attorneys generally have on-going continuing education and professional character standards. Attorneys may offer a range of services; some attorneys specialize in tax preparation and planning.

Limited Representation Rights: Some preparers without one of the above credentials have limited practice rights. They may only represent clients whose returns they prepared and signed, but only before revenue agents, customer service representatives, and similar IRS employees, including the Taxpayer Advocate Service. They cannot represent clients whose returns they did not prepare and they cannot represent clients regarding appeals or collection issues even if they did prepare the return in question. Tax return preparers with limited representation rights include:

• Annual Filing Season Program Participants – This voluntary program recognizes the efforts of return preparers who are generally not attorneys, certified public accountants, or enrolled agents. It was designed to encourage education and filing season readiness. The IRS issues an Annual Filing Season Program Record of Completion to return preparers who obtain a certain number of continuing education hours in preparation for a specific tax year.
   
• Beginning with returns filed after December 31, 2015, only Annual Filing Season Program participants have limited practice rights. Learn more about this program.
   
• PTIN Holders – Tax return preparers who have an active preparer tax identification number, but no professional credentials and do not participate in the Annual Filing Season Program, are authorized to prepare tax returns. Beginning January 1, 2016, this is the only authority they have. They have no authority to represent clients before the IRS (except regarding returns they prepared and filed December 31, 2015, and prior).

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