The Internal Revenue Service is residing taxpayers to choose a tax return preparer with care. Even though the vast majority of tax return preparers provide honest, quality service, some cause great harm through fraud, identity theft and other scams every year.
People value good tax return preparers for helping them through a complicated tax situation or for being available when they don’t have time to prepare their own tax return. Paid tax return preparers completed more than half of the tax returns submitted to the IRS in tax-year 2018.
It’s very important to select the right tax professional. After all, people trust them with their most sensitive personal and financial information. No matter who prepares it, the accuracy of a tax return is ultimately the responsibility of the taxpayer. The IRS protects taxpayers by assessing significant civil penalties against dishonest return preparers and working with the Justice Department to end scams and prosecute the criminals behind them.
What to look for
The Choosing a Tax Professional page on IRS.gov has information about tax return preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.
By law, anyone who is paid to prepare or assists in preparing most federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund.
Well-intentioned taxpayers can be deceived by preparers who don’t understand taxes or who mislead people into taking credits or deductions they aren’t entitled to claim. Fraudulent preparers often do this to increase their fee. Here are more tips to consider:
- Look for a preparer who is available year-round. In the event questions come up about a tax return, taxpayers may need to contact the preparer after the filing season is over.
- Inquire whether the tax return preparer has a professional credential (enrolled agent, certified public accountant or attorney), belongs to a professional organization or attends continuing education classes. Because tax law can be complex, competent tax return preparers remain up to date on tax topics. The IRS website has more information regarding national tax professional organizations.
- Check the preparer’s history. Check the Better Business Bureau website for information about the preparer. Look for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory.
- Ask about service fees. Avoid preparers who base fees on a percentage of their client’s refund or boast bigger refunds than their competition. Don’t give tax documents, Social Security numbers or other information to a preparer if merely inquiring about their services and fees. Unfortunately, some unscrupulous preparers have used this information to improperly file returns without the taxpayer’s permission.
- Provide records and receipts. Good preparers ask to see these documents. They’ll also ask questions to determine the client’s total income, deductions, tax credits and other items. Do not hire a preparer who e-files a tax return using a pay stub instead of a Form W-2. This is against IRS e-file rules.
- Understand representation rules. Attorneys, CPAs and enrolled agents can represent any client before the IRS in any situation. Annual Filing Season Program participants may represent taxpayers in limited situations if they prepared and signed the tax return.
- Never sign a blank or incomplete return.
- Review the tax return before signing. Be sure to ask questions if something is not clear or appears inaccurate. Any refund should go directly to the taxpayer – not into the preparer’s bank account. Reviewing the routing and bank account number on the completed return is always a good idea.
- Report abusive tax preparers to the IRS. Use Form 14157, Complaint: Tax Return Preparer . If a return preparer is suspected of filing or changing the return without the client’s consent, also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit . Forms are available on IRS.gov.
- IRS.gov/chooseataxpro has additional information to help taxpayers including tips on choosing a preparer, the differences in credentials and qualifications, as well as how to submit a complaint regarding an unscrupulous tax return preparer.
Start early; ask for phone or virtual help
It is advisable to start searching for a tax return preparer as soon possible. This allows for more time to do research and get recommendations. Remember, taxpayers must pay any taxes due by April 15, even if an extension is necessary.
Be sure to check with the tax return preparer to see if there are any restrictions or additions to the services they provide because of the COVID-19 pandemic. Some may offer phone or virtual assistance options in addition to their usual in-person services. Customers may be asked, for example, to mail documents to them or scan and e-mail documents through a secure internet connection.
Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov. They can use these resources to get help when it’s needed, at home, at work or on the go.