2013-03-13 21:49:51 -
Thomson Reuters analyst explains six considerations for choosing a reputable
U.S. individual tax preparer
NEW YORK, March 13, 2013 -"If you're one of the many Americans who depends on a
tax return preparer to do your taxes, remember that you're still legally
responsible for what's on your tax return even if it's prepared by someone
else," says Harris Abrams, Esq., a senior tax analyst at Thomson Reuters.
"A competent return preparer can make your life a lot easier - and make sure you
get every legitimate tax break. But, an inexperienced or unethical preparer can
put you on the wrong side of the IRS, warns Abrams." So, it is important to
choose carefully when hiring a preparer - whether hiring a certified public
accountant (CPA), a tax attorney, a solo
practitioner, a large firm, or other
Abrams advises that taxpayers consider the following situations when choosing,
and using, a tax return preparer:
1. Is this person qualified? Ask the CPA, attorney, or any other paid
preparer whether he or she is affiliated with a professional organization that
provides its members with continuing education classes and holds them to a code
of ethics. The IRS is seeking to require that those who are not an attorney,
CPA, or enrolled agent (EA) register with the IRS, pass a test to demonstrate
that they have met minimal competency requirements, and satisfy continuing
education rules and ethical standards. Those who pass the IRS test would become
Registered Tax Return Preparers (RTRPs). However, these requirements have been
challenged in court and are not yet in effect.
2. How does the preparer's track record look? Check to see if the preparer
has a questionable history with the Better Business Bureau. Also check for any
disciplinary actions and licensure status through the state bar associations for
attorneys, the state boards of accountancy for CPAs, and the IRS Office of
Professional Responsibility for enrolled agents (EAs).
3. On what criteria does the preparer base service fees? Avoid preparers who
base their fees on a percentage of the refund or those who claim they can get
larger refunds than other preparers. "There's a right way to prepare a return,"
Abrams notes. "While you obviously don't want to pay more tax than you should,
you also don't want to pay less - unless you want to run the risk of being
audited and paying the amount of tax you actually owe plus interest and
penalties. So, it's best to steer clear of preparers whose pay depends on how
big a refund they can get you."
4. What should be provided to the preparer? Taxpayers should gather records
and receipts ahead of time. Any reputable preparer will ask to see them. And any
reputable preparer will ask multiple questions to determine the total income and
the qualifications for credits, deductions, exemptions, etc. "Getting all your
ducks in a row before you meet with the preparer will make the process quicker
and less stressful, and reduce the chance of missing a tax break you have coming
to you," Abrams advises.
5. Who is responsible for the return? Even though a professional may prepare
the return, it is still the taxpayer's return. Taxpayers should make sure they
understand the elections and are comfortable with the accuracy of the return
before signing it. "A reputable tax return preparer will generally be glad to
answer any questions you have." says Abrams. "This is a classic example of a
situation where the only dumb question is the one that you don't ask. And
remember - even though the preparer signs the return as well, it's the taxpayer
who is responsible for the accuracy of every item on that return. So, take the
time to know what you're signing. An obvious corollary is that you should never
sign a blank return - or do business with a preparer who asks you to do so."
6. Is the preparer reachable? "You sign the return, leave the preparer's
office with a copy, and the preparer e-files it. End of story? Not always." Even
a perfectly accurate return can be audited - and that may not happen until long
after mid-April. Abrams also notes that, "an IRS audit is one of the most
stressful experiences most people can imagine. Your chances of getting through
unscathed are a lot better with a professional by your side. So, try to make
sure the preparer will be available for questions after the return is filed."
Taxpayers should consult with a personal tax adviser before applying these or
other tax strategies.
Up-to-date analyses of legislation and regulations affecting individual
taxpayers are available for tax and accounting professionals on the industry-
leading, award-winning Thomson Reuters Checkpoint research platform.
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Ruth Ann Baker
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