How to Choose the Right Tax Return Preparer

Posted on February 04, 2016

Filling out and filing your tax returns every year is no picnic. That’s why many of us turn to a tax return preparer to handle the process for us. It’s no secret that the tax return preparation industry is big business. In fact, by some estimates, the tax return preparation industry generates nearly $10 billion in annual revenue.

As you finish collecting the last of your tax documents to begin the process of filing your tax return for 2015, it’s important to know how to hire the right tax return preparer. Hiring an incompetent or untrustworthy tax return preparer can result in a long list of tax problems, including bank levies, seizure of assets, wage levies or even criminal prosecution. When searching for a tax return preparer, if you come across someone who exhibits one or more of the following characteristics, immediately move on to someone else:

  • Refuses to sign your tax return.  A tax return preparer that will not sign your tax return as the official preparer or does not use a tax preparer identification number is probably hiding something and should not be used.  A tax return preparer needs to stand behind his or her work.
  • Promises a large refund.  No reputable tax return preparer can promise a refund to you.  A reputable tax return preparer must first review all of your tax documents and prepare an honest and accurate tax return before being able to determine your tax liability, let alone whether you are entitled to a refund.
  • Asks you to sign a blank or partially completed tax return.  You should only sign a valid and completed tax return and only after you review it to make sure it is honest and accurate.
  • Offers to deposit your refund into their bank account and pay you later.  At no time should you give authorization to a tax return preparer to handle your refund.

Questions to ask a tax preparer

Tax preparation fraud can result in felony charges against the tax return preparer and generate liability for the taxpayer, including criminal charges.  Now that we have discussed tax return preparers to avoid, here are some simple questions to ask when trying to find the right tax return preparer for you.

Does the preparer possess professional credentials? Do they take continuing education courses? Can they provide proof of their credentials? If your preparer is an attorney qualified to prepare tax returns, an enrolled agent or a certified public accountant, they have demonstrated substantial proficiency requirements, including having passed certain exams to earn their credentials.

These professionals are also required to take annual continuing education courses in order to continue practicing. If your preparer is none of the above, they could still be credentialed as long as they complete the IRS’ Annual Filing Season Program. Tax return preparers with credentials and select qualifications can be found in this IRS directory.

When choosing a tax return preparer it’s important to keep in mind that only a CPA, attorney or enrolled agent can provide you with unlimited representation before the IRS in any matter, including appeals, collections and audits.

As you consider who to hire to prepare your taxes, it’s essential to remember that you are ultimately responsible for the information provided to the IRS on your tax return. If you have further questions about hiring someone to prepare your tax return for 2015, contact Chicago tax attorney Patrick T. Sheehan today.

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