The IRS has issued a nice set of Fact Sheets to start the filing season, including a summary of 2009 tax law changes. One of the most useful fact sheets is the one on avoiding preparer fraud. It includes this helpful information:
Be cautious of tax preparers who claim they can obtain larger refunds than other preparers.
Avoid preparers who base their fee on a percentage of the refund.
Use a reputable tax professional who signs the tax return and provides a copy.
Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.
Check the person’s credentials. Only attorneys, certified public accountants (CPAs) and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.
Ask friends and family whether they know anyone who has used the tax professional and whether they were satisfied with the service they received.
These are helpful tips, but they are incomplete, so as a public service we provide these tips to avoid really bad preparers:
- Be cautious of preparers who say they can help you obtain a larger extension than other taxpayers.
- Avoid tax preparers who base their fee on the value of your jewelry.
- Avoid preparers who refuse to give you a copy of your own return on 5th amendment grounds.
- When you consider whether the preparer will be around to answer questions about the tax return, remember that prison visiting hours don't count.
- Check the person's credentials. Certified karaoke instructor credentials and rabies tags are normally not sufficient tax preparer credentials.
- Find out if the preparer is affiliated with a professional organization that provides its members with new identities and holds them to a code of silence.
- Ask friends and family whether they know anyone who has used a tax professional and whether they are satisfied with the sentence they received.
And have a great tax season!
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to