It’s important for taxpayers to find qualified tax professionals if they need help preparing and filing their tax returns. Unqualified tax preparers may overlook legitimate deductions or credits that could cause clients to pay more tax than they should. Unqualified preparers may also make costly mistakes, causing their clients to incur assessed deficiencies, penalties, and interest.
Here are some suggestions to consider when hiring a tax professional:
* Paid preparers must sign a client's tax return as required by law. If they don't, this is a major "red flag."
* Avoid preparers who claim they can obtain larger refunds than other preparers. If your returns are prepared correctly, every preparer should derive substantially similar numbers.
* Beware of a preparer who guarantees results or who bases fees on a percentage of the amount of the refund. A practitioner may not charge a contingent fee (percentage of your refund) for preparing an original tax return.
* Understand that the most reputable preparers will request to see your receipts and will ask you multiple questions to determine your qualifications for expenses, deductions, and other items. By doing so, they have your best interest in mind and are trying to help you avoid penalties, interest, or additional taxes that could result from an IRS examination.
* Choose a tax preparer you will be able to contact and one who will be responsive to your needs. Ask who will actually prepare the return before engaging services. Avoid firms where your work may be delegated down to someone with less training or some unknown worker. You should know exactly who works with your tax matters at all times and how to contact him or her; after all, you are paying for it. Determine if the preparer is exporting your return to a foreign country for preparation. Foreign countries do not have the same security and privacy laws as the United States, nor is there any recourse should your information be compromised as a result of lax or nonexistent privacy procedures.
* Investigate whether the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for certified public accountants, the state’s bar association for attorneys, or the IRS Office of Professional Responsibility (OPR) for enrolled agents.
* Determine if the preparer’s credentials meet your needs. Is he or she an enrolled agent, certified public accountant (CPA), or tax attorney? Only attorneys, CPAs, and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection actions, and appeals. Other return preparers may represent taxpayers only in audits regarding a return that they signed as a preparer.
* Find out if the preparer is affiliated with a professional organization that provides or requires its members to pursue continuing education and holds them accountable to a code of ethics.
* Check the Internal Revenue Service's Web site at www.IRS.gov for information regarding abusive shelters and other tax schemes and scams. Remember, if it sounds too good to be true, chances are it is.
For more information about tax preparers, see this article on the IRS Web site at www.irs.gov/individuals/article/0,,id=133088,00.html.
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