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Choosing your tax professional

I want to urge you to be careful when choosing a tax preparer.

It is easy for untrained tax preparers to enter into the tax return business.  There are currently no licensing requirements by the IRS for federal unenrolled tax preparers.

CPAs and Enrolled Agents are required to pass exams and meet continuing education requirements.  Enrolled Agents are the only federally licensed tax practitioners who specialize in taxation and have unlimited rights to represent taxpayers before the IRS.

A few years ago, one of my retired clients decided to become a tax preparer and took a course offered by a franchise tax business.  The franchise hired him, but neither the owners of the franchise nor the employees had sufficient tax experience for filing fairly basic tax returns.  He owned a rental property.  Consequently, his return required a form which is very simple to complete.  He decided to drive an hour to have me prepare his return because he felt nobody was competent enough at his office.

Here are several things to keep in mind when hiring a tax pro:

Check the preparer’s qualifications.  You can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.  This tool helps you find a tax return preparer with specific qualifications.

Check the preparer’s history.  For CPAs, check with the state board of accountancy.  For Enrolled Agents, go to the verify enrolled agent status page on IRS.gov or check the directory.

Ask the preparer about their fee.  Avoid preparers who base fees on a percentage of the refund.

Avoid preparers who boast that they always get bigger refunds than their competition.

Make sure the preparer is available after tax season.  You may need to contact the preparer after April 15.  Avoid fly-by-night preparers.

All paid preparers are legally required to sign returns and include their PTIN.  Do not use a preparer who refuses to sign and include their PTIN.

Most tax preparers are honest.  However, if you encounter one who appears to be dishonest, use Form 14157, Complaint; Tax Return Preparer.

It may be beneficial to have another tax professional review your return. 

As an example, one of my new clients had a tax attorney who had recommended a CPA for preparing her return.  She had owed about $1,000 for the two previous tax returns combined, which had been prepared by her CPA.  She had me review her returns, and after I had revised them, she got a refund of over $11,000 for the two years instead of owing $1,000.  She said, “David, this sounds too good to be true,” so I showed her what caused the difference in the Master Tax Guide.  Then I made a copy from the Master Tax Guide and told her to show it to the IRS so that she knew the change was legitimate.

Discovering revisions does not happen often, but if it does make sure the change to the return is legitimate.

David Zubler is a tax accountant and an Enrolled Agent in East Tennessee, the author of four books, and a philanthropist.  All of his proceeds from the books go to a charitable foundation he created for underprivileged children.  He is also the founder of Your Tax Care which provides tax education and rescues from IRS problems. David can be reached for questions and consultation at yourtaxcare.com.