This week the IRS lost an appeals court decision and its ability to regulate tax preparers, specifically to mandate the professional standards of all tax preparers.
Today, a person must register and get a license to cut your hair, but anyone can practice tax preparation. Enrolled Agents remain licensed by the IRS and US Treasury to represent tax payers. Attorneys and CPA’s are accountable to their state licensing board. But what about the rest of the tax preparers who claim to know what they are doing?
Last year the majority of professionally prepared tax returns were done by unregulated tax preparers. As a result, the IRS is trending the returns of your tax preparer. Even if your tax filing is legitimate, if you are dealing with a shady tax professional, your return might be pulled for an extensive review.
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How do you secure someone who is competent and someone who serves your best interest?
Ask about service fees. Especially, find out what fees exist if you have questions or need help after the tax season. Why should you pay extra for audit protection?
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Make sure your tax preparer is available after April 15. Must you leave a message with someone or can you get in touch with the same person who prepared your return?
If there is a problem, do you have to resolve the issue yourself or is the person who prepared your return licensed to represent you?
Check the preparer's qualifications and history - All IRS tax preparers are still required to have a PTIN and find someone who is established in your community.
Ensure your preparer signs your return and includes the PTIN. The IRS has begun an aggressive campaign to identify unqualified and unscrupulous preparers. The PTIN is essential for the IRS to audit tax preparers. Otherwise, you are declaring that you are solely responsible for your tax filing.
Provide records and receipts - Good preparers will ask to see them, will ask you questions and will inform you of your record retention requirements. Better records usually lead to paying less in taxes.
Never sign a blank return and always review your return before signing it. Your tax preparer must explain every item that appears on your federal and state return.
Demand that the return be e-filed and that you will receive an acknowledgement.
You can report any abusive tax preparer to the IRS, Google Form 14157, Complaint: Tax Return Preparer.
