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Do You Pass Inspection as a Tax Preparer?

Mar 11th 2019
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IRS criteria tax return preparers
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The IRS just listed the “Dirty Dozen tax scams” to watch out for in 2019. It also notes that tax return preparer fraud, one of the perennial items on the list, is back again. In fact, the agency is now offering several tips to help taxpayers avoid unscrupulous tax return preparers (IR-2019-32, 3/7/19).

Due to the Tax Cuts and Jobs Act (TCJA), the most sweeping tax reform legislation in more than three decades, some taxpayers may choose to have a paid professional prepare their returns this year, even if they’ve done it themselves previously. Although most professionals provide honest, high-quality services, a small minority perpetrates refund fraud, identity theft and other scams that hurt innocent taxpayers.

“Tax professionals provide an incredibly valuable service to taxpayers and our nation’s tax system,” said IRS Commissioner Chuck Rettig. “We encourage people to carefully choose who they trust with their most sensitive tax and financial information. There are some simple steps taxpayers can follow to make sure they’re getting good, professional help.”

The IRS spotlights several key issues when hiring an individual or firm to prepare a tax return. How many of the following questions can you answer “yes” to?

  • Are you available year-round? In the event that questions arise about a tax return, taxpayers may need to contact the preparer after the filing season is over.
  • Do you have a Preparer Tax Identification Number (PTIN)? Paid tax return preparers are required to register with the IRS, have a PTIN and include it on tax returns.
  • Do you possess the requisite professional credentials as an Enrolled Agent (EA), Certified Public Accountant (CPA) or tax attorney, belong to a professional organization or attend continuing education classes? Because the law can be complex, especially in the wake of the TCJA, competent tax preparers must remain up to date on relevant topics.
  • Are you qualified? The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications is a valuable tool for locating preparers with the preferred qualifications.
  • Have you avoided disciplinary actions? The Better Business Bureau, State Accountancy Board and State Bar Association are good sources of information. For EAs, taxpayers can go to www.irs.gov and search for “verify enrolled agent status” or check the Directory.
  • Do you charge reasonable fees? The IRS advises taxpayers to avoid preparers who base fees on a percentage of their client’s refund or boast bigger refunds than their competition.
  • Do you offer IRS e-filing? Paid preparers who do taxes for more than ten clients generally must file electronically. 
  • Do you check records and receipts? Good preparers request these documents. They’ll also ask questions to determine a client’s total income, deductions, tax credits and other items.
  • Do you review tax returns before they are filed? It’s important to question something if it is not clear or appears inaccurate. Any refund should go directly to the taxpayer—not into the preparer’s bank account.

If you’ve answered “yes” to all these questions, you should be in good standing. Don’t hesitate to encourage clients to make further inquiries. When you provide the right answers, they will know they are in good hands.

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