The first thing to keep in mind when picking a suitable tax preparer is the cardinal rule: you are responsible for your tax return. Translation – pick your tax return preparer carefully! Unqualified tax preparers may not only overlook legitimate deductions or credits that could cause clients to pay more tax than they should, but they may also make costly mistakes causing their you additional money in assessed deficiencies, penalties, and interests. A few rules to consider:
1. Probably the most important factor to consider in picking a preparer is his/her accreditation. Generally, accredited preparers who are qualified to practice before the IRS are regulated by professional bodies and do conduct themselves according to specified ethical standards. Three classes of professionals readily fit into this group –Attorneys, CPAs and Enrolled Agents. Only these professionals may represent taxpayers in audits, collection actions and appeals. These groups of professionals are less likely to get you in trouble as they may be subject to discipline by the IRS, as well as their professional associations.
2. Prepared correctly, different tax preparers should derive substantially the same refund/balance due for the same tax return. Therefore, you should avoid tax preparers who guarantee you a huge refund, higher than what you will get from other tax preparers.
3. You should investigate the level of familiarity/expertise of your tax preparer. Some preparers are good for the most basic tax return. Should your return involve a bit more complexity, some preparers may be unqualified to prepare the return, but be unwilling to tell you.
4. Tax preparers who base their charges on the amount of return they can get you are to be avoided at all costs. For one, it is illegal to base charges for preparing a tax return on the amount of refund. Moreover, these types of preparers often have incentives to get illegally creative in getting you a higher refund (and higher fees for them).
5. You should always avoid preparers who are unwilling to sign the return they prepared. This is often a good clue that the return contains deductions that are likely to get you in trouble, and the preparer does not want to be associated with the return. Should trouble arise, you will be left holding the bag.
6. Choose a preparer you will be able to contact and who will be responsive. A good indication is knowing the preparer’s place of business. If there’s trouble, you know where to find him/her. Avoid preparers where your return will be assigned to a less qualified worker or someone unknown. Some preparers have been known to assign returns to persons outside of the country for preparation. You certainly do not want your return prepared by an unqualified foreign person.
7. Some due diligence is in order as a taxpayer. Inquire as to whether the preparer has a record with the local chapter of the Better Business Bureau or similar agencies. If the preparer is a professional such as a CPA or an attorney, you may be able to check with the relevant association to verify whether preparer is in good standing.
8. Finally, review the return before you sign it. If there are any part(s) of the return you don’t understand or disagree with, ask questions and get clarifications! After all, you are responsible for the return.
