It’s interesting how a good percentage of Americans employ the service of Tax Preparers but do not carry out a good background check on the person. You should not take chances when sourcing for someone who will help you prepare your tax returns because this is someone you are committing very important personal and financial details to.
That a person claims to be a professional does not mean you shouldn’t probe their capability. Moreover, you have a whole lot to lose if they are not competent enough or are scammers.
If you have been unintentional about going the extra mile knowing your Tax Preparer, it’s time you turn a new leaf.
Here are some great tips that will aid you in securing a professional Tax Preparer near you:
#1 Ask for their PTIN
The Preparer Tax Identification Number (PTIN) issued by the Internal Revenue Service (IRS) is an essential requirement for all professional Tax Preparers. Tax Preparers are also required by law to include this number together with their signature on any return they prepare before these returns are being submitted to the IRS. You can confirm the PTIN of your potential Tax Preparer. Note: The PTIN is renewed every year
#2 He/she must be well-informed
A professional Tax Preparer suitable for your need should not just be knowledgeable about federal tax but must also be well informed about the filing requirements or your state or locality.
It is equally important that he/she can handle changes such as you relocating from one state to another within a year, or you have a business running in another state.
#3 Recommendation and Referrals
The recommendation of a Tax Preparer by those you trust; be it friends, relatives, coworkers, etc., can give you some assurance about the Person. In other words, the testimony of another can serve as some sort of social proof for you to work with a Tax Preparer. Although, this doesn’t mean you shouldn’t do some background checks yourself.
#4 Be deliberate about their designation
Any Jack can call themselves whatever. You have to verify if the Tax Experts you are considering are what they claim to be. Remember, you will be sharing confidential personal and financial information with this person; you cannot leave the situation to chance. You have to be assured they are indeed professionals.
More often than not, Tax Preparers who are vetted by the IRS or state regulatory board are Professionals. Examples include Enrolled Agents (EAs), Certified Public Accountants (CPAs), Tax Attorneys, etc.
#5 Verify their designation
Like earlier stated in the point above, you have to be intentional about whosoever is handling your tax return. Ensure that he or she is either an Enrolled Agent (EA), a Certified Public Accountant (CPAs), or a Tax Attorney. Do not just divulge your information to someone who claims to be a Tax Preparer but does not have a special designation.
An EA is usually licensed by the Internal Revenue Service (IRS). To obtain the designation of an EA, an individual must pass a standardized test that includes all the parts of the tax code; alternatively, the individual must have at least 5 years of experience working in a qualified position for the IRS. In addition, he or she must complete 72 hours of continuing education every 3 years.
CPAs are usually certified by the state boards of accountancy under the inflexible state licensing rules which include education, examination, and experience requirements. CPAs are also required to complete extensive continuing education requirements and adhere to a broad code of conduct and tax ethical standards.
Regardless of the Tax Preparer you decide to settle for, it is essential that you verify their credentials and designation.
#6 They should be able to represent you for an audit
It is also important that you know that there is a possibility the IRS requests additional information from you months after you’ve filed your return. You wouldn’t want to start hunting for the Tax Preparer that prepared your return. To avoid unnecessary stress in the future, you have to be sure they do audits, and they can be easily contacted.
NB. Do not employ the service of someone you are not sure about their location; or Tax Preparers with temporary locations.
#7 Ensure that they can file electronically
A professional Tax Preparer must be able to file electronically. Reason being that the IRS made e-filing a requirement for any Tax Preparer who files more than 10 returns in any tax season. If your potential Tax Preparer does not have the option of e-filing, it may be a sign they are not the professional you are looking for.
#8 Check for reviews
Even when a Tax Preparer got referred or recommended to you by a close ally or a relative, it is an added advantage if you check what others are saying about the person online. This will help you establish more social proof about the person.
Look out for how your potential Tax Preparer handled any complaint that may have been filed against them. You may also want to know if any lawsuit filed against them in the past was resolved amicably.
Another important review you should do is that of your return. You should scrutinize your return before it is turned over to the IRS. Ensure that the PTIN of your Preparer together with his/her signature is legibly present at the end of your Form 1040.
#9 Be clear about their fee structure
A professional Tax Preparer should be able to explicitly state their fee structure. They might not be able to give you an exact fee because the price may vary depending on the complexity of your return but they should be able to give you an idea of how they charge, i.e., their fee structure.
#10 Follow the whole process of filing your return wholeheartedly
The fact that you are going for a professional Tax Preparer shows that you want someone who will file everything correctly and help maximize your return. You shouldn’t just throw everything on their laps and look the other way. You have to follow through the process step by step; be as involved as possible. Remember that if anything goes wrong, you will bear most, if not all, of the brunt.
To sum up, it is understandable you employed the service of a Tax Preparer because you want to take the stress – of preparing a return- off yourself. However, it is important that you are certain the person you are employing is truly a professional.
I believe this article is of great help to you. Kindly share your thoughts.
Kenneth Omoruyi is the owner of Enrolledagent.com, an online portal to find enrolled agent. He has earned his Master’s degree in Business Taxation at the University of Southern California, Leventhal School of Accounting. Currently, he is an adjunct professor of Accounting at Lonestar College and the 2020/2021 Vice Chair – Tax Expo Committee – Houston CPA Society.