As the holidays approach and the year winds down, tax season is looming on the horizon. One important way for taxpayers to stay out of trouble this tax year is to choose the right person to handle their returns. There are many options out there for preparing tax returns, including do-it-yourself options, local storefronts, CPAs, and attorneys. Take the time to ensure you choose the right preparer for your needs to keep yourself from unnecessary trouble later.
9 Tax-Preparer Practices to Avoid
While there are many tax preparers to choose from, avoid those who possess any of the following qualities:
- Questionable ethics. It is important to remember that you are entrusting your tax preparer with your most personal information, including your social security numbers and a record of all of your accounts. Choosing an office with less than scrupulous ethics could lead to issues later.
- Percentage fees. Preparers who charge you a percentage of your refund may be incentivized to push the limit with regard to your return, increasing your chance of an audit.
- Lack of education. The tax code is constantly changing. It is crucial to choose someone who takes continuing education seriously to reduce the chance of issues down the road.
- Complaints against them. Tax preparers who have had complaints filed against them with the Better Business Bureau should be avoided.
- Lack of licensing. Stay away from tax preparers who do not have the proper certifications and licenses through the IRS Office of Enrollment, the state board of accountancy, or the state bar association.
- Poor record-keeping. Tax preparers who do not insist on seeing receipts and records to back up the information that you provide are unlikely to be able to prepare your return accurately.
- Lack of communication. Some preparers tend to disappear after the tax filing due date. This is not helpful if you have questions that come up after the return is already filed.
- Unwillingness to answer questions. Tax preparers who are unwilling or charge extra for your questions about the return are undesirable. You should not sign the return until you are fully comfortable and understand exactly what it entails.
- Ask you to sign a blank return. Only unscrupulous tax preparers will ask you to sign a blank return. This is a huge issue because you will have no way of knowing what information is later being filed with the IRS. If the information is inaccurate, you will be the one to suffer the consequences.
If the tax preparer that you are considering possesses any of these qualities, you are better off to keep searching.
Know the Differences Between Tax Preparers
Now that you know who not to hire, it is important to consider who you should actually work with. There are various types of practitioners who fall into two different categories. These categories are broken down by “representation rights.” People with unlimited representation rights can represent their clients on any matters, including audits, payment or collection issues, and appeals. People with unlimited representation rights include enrolled agents licensed by the IRS, certified public accountants, and attorneys. Accountants and attorneys are licensed by their respective states.
People with limited representation rights can only represent clients whose returns they prepared and signed. They are only able to represent these clients before revenue agents, customer service representatives, and the Taxpayer Advocate Service. They are not permitted to represent clients if they did not prepare their return or with regard to appeals or collection issues. Preparers with limited representation rights include annual filing season program participants, and people with a preparer tax identification number but no professional credentials. It is important to note that only annual filing season program participants will have limited representation rights for all returns prepared after January 1, 2016.
With tax season approaching, it is time to start thinking about your tax related problems and needs. We are here to help. Learn more about the experiences of our previous clients by checking out our client testimonials today.