The Internal Revenue Service (IRS) annually warns taxpayers to use extra precautions when choosing a preparer.
Many people can claim to be tax preparers —especially as the April 15 tax deadline nears. Because taxpayers are legally responsible for what’s on their returns even if someone else prepares them, it’s crucial to understand the qualifications of the person who will be preparing your return.
The IRS developed a public online database of tax preparers who obtained a Preparer Tax Identification Number (PTIN), which is required for anyone to prepare a federal return for compensation. It’s important to know that there are no minimum education or experience requirements to obtain a PTIN or be listed in the IRS database.
The IRS and the Oklahoma Society of Certified Public Accountants (OSCPA) offered a few points to keep in mind when someone else prepares your return:
Check the person’s qualifications. New regulations require all paid tax return preparers to have a PTIN) In addition to making sure they have a PTIN, ask if the preparer is affiliated with a professional organization and attends continuing education classes.
Check the preparer’s history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the Oklahoma Accountancy Board for certified public accountants (CPAs); the state bar associations for attorneys; and the IRS Office of Enrollment for enrolled agents.
- Enrolled Agents: An enrolled agent (EA) is licensed by the federal government and is authorized to represent a taxpayer at any IRS meeting or hearing. Many are former IRS employees and those who don’t need to pass an IRS test. They are also required to complete an average of 24 hours of continuing education per year.
- Tax Attorneys: Tax attorneys don’t necessarily specialize in filing tax returns. You may want one if you encounter legal issues regarding your taxes. Tax attorneys can represent you before the IRS as well as in court. Many specialize in certain areas, so be sure you choose one who suits your needs.
- CPAs: Though not all CPAs are tax preparers, all CPAs first must pass the rigorous Uniform CPA Examination in order to qualify for their licenses. Additionally, they are required to take an average of 40 hours of continuing education per year, as well as ethics courses.
Find out about service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers. Also, always make sure any refund due is sent to you or deposited into an account in your name. Under no circumstances should all or part of your refund be directly deposited into a preparer’s bank account.
Ask if they offer electronic filing. Any paid preparer who prepares and files more than 10 returns for clients must file the returns electronically, unless the client opts to file a paper return. More than 1 billion individual tax returns have been safely and securely processed since the debut of electronic filing in 1990. Make sure your preparer offers IRS e-file.
Make sure the tax preparer is accessible. Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.
Provide all records and receipts needed to prepare your return. Reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items. Do not use a preparer who is willing to electronically file your return before you receive your Form W-2 using your last pay stub. This is against IRS e-file rules.
Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.
Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.
Make sure the preparer signs the form and includes his or her preparer tax identification number (PTIN). A paid preparer must sign the return and include his or her PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.
Having your return prepared accurately by a knowledgeable tax expert can save you both time and money—and help prevent possible IRS penalties or audits in the future.
For more advice on hiring a tax preparer, visit the OSCPA website and download a free copy of “Top 10 Questions to Ask a Tax Preparer: Tips, Hints & Warning Signs.”
To get personalized advice on family finances, visit your CPA. He or she can help you with your financial questions and concerns. If you don’t have one, get a free referral and free 30-minute consultation at www.FindYourCPA.com.
With more than 6,500 members in public practice, industry, government and education, the OSCPA is Oklahoma’s only statewide professional association of CPAs. Since 1918, the organization has continued to provide professional education, conduct quality reviews and promote and maintain high standards of integrity and competence within the accounting profession.
This content sponsored by the Oklahoma Society of CPA’s.