How to Choose a Tax Preparer

Feb 6, 2013 by

signing a tax returnI ran across this week a list of ten tips from the IRS to “help you choose a tax preparer.” I think the IRS’ list is good, but a huge tip that could save you a lot of dough didn’t make the list! Since the overlooked tip should be done first, I’ll call it tip number zero:

0. Do you qualify for free tax preparation help through the Freefile, VITA, or TCE programs?

If the answer to Tip #0 is ‘no,’ then proceed to the IRS’ 10 tips:

  1. Check the preparer’s qualifications.  All paid tax return preparers are required to have a Preparer Tax Identification Number (PTIN). In addition to making sure they have a PTIN, ask if the preparer belongs to a professional organization and attends continuing education classes.
  2. Check the preparer’s history.  Check with the Better Business Bureau to see if the preparer has a questionable history. Also check for any disciplinary actions and for the status of their licenses. For certified public accountants, check with the state boards of accountancy. For attorneys, check with the state bar associations. 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 claim they can obtain larger refunds than other preparers can. Also, always make sure any refund due is sent to you or deposited into an account in your name. 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 must file the returns electronically, unless the client opts to file a paper return. IRS has safely and securely processed more than one billion individual tax returns since the debut of electronic filing in 1990.
  5. Make sure the preparer is accessible.  Make sure you will be able to contact the tax preparer after you file your return, even after the April 15 due date. This will be helpful in the event questions arise about your tax return.
  6. Provide records and receipts.  Reputable preparers will request to see your records and receipts. They will ask you questions to determine your total income and your qualifications for deductions, credits and other items. Do not use a preparer who is willing to e-file your return by using your last pay stub before you receive your Form W-2. This is against IRS e-file rules.
  7. Never sign a blank return.  Avoid tax preparers who ask you to sign a blank tax form.
  8. Review the entire return before signing.  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.
  9. Make sure the preparer signs and includes their PTIN.  A paid preparer must sign the return 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 on Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or altered a return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. Download the forms on the IRS.gov website or order them by mail at 800-TAX-FORM (800-829-3676).

I’ve got two more tips to add:

11. If a tax preparer suggests anything resembling a “Refund Anticipation Loan” (a notorious rip-off), get out of there as fast as you can!

12. To help avoid being victimized by tax season identity theft, file early!

What’s Your Experience with Tax Preparers?

Do more tips come to mind from your experience in selecting and working with tax preparers?

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