Optima Tax Relief Gives Tips on How to Choose a Tax Return Professional
The Internal Revenue Service (IRS) has issued a reminder to taxpayers emphasizing the importance of careful consideration when choosing a tax return professional. With tax season underway, selecting the right tax preparer is crucial for ensuring accurate and compliant tax filings. Optima Tax Relief highlights several essential factors that taxpayers should keep in mind to make informed decisions.
Credentials and Qualifications
Taxpayers are advised to verify the credentials and qualifications of tax return professionals before engaging their services. All tax preparers should have a Preparer Tax Identification Number (PTIN). There may also be other qualifications needed in certain states. For example, some California tax preparers must register with the California Tax Education Council (CTEC). Some New York tax preparers must register with the New York State Tax Department. Enrolled agents, certified public accountants (CPAs), and attorneys are authorized to represent taxpayers before the IRS and are typically well-equipped to handle complex tax matters.
Preparer Tax Identification Number (PTIN)
Tax return professionals are required to have a valid PTIN issued by the IRS. Taxpayers should ask for the preparer’s PTIN and ensure that it is included on the tax return. This helps track the preparation of individual tax returns and ensures accountability.
Professional Associations and Affiliations
Tax professionals who are members of recognized professional associations or organizations often adhere to high ethical standards and ongoing professional development requirements. Taxpayers may consider choosing professionals affiliated with reputable industry associations. The IRS website houses a directory of federal tax preparers that hold professional credentials or who hold an Annual Filing Season Record of Completion. This is a voluntary program that recognizes a preparer’s continuing education in tax prep each year.
Fee Structure
It’s essential for taxpayers to understand the fee structure of tax return professionals upfront. Some professionals charge a flat fee, while others may bill based on the complexity of the return or the time required to complete it. Transparency regarding fees helps avoid surprises and ensures a clear understanding of the cost of services.
E-filing and Direct Deposit
Taxpayers are encouraged to choose a tax return professional who offers electronic filing (e-filing) and direct deposit options. E-filing is a secure and efficient way to submit tax returns to the IRS, while direct deposit allows for faster receipt of refunds.
Red Flags to Watch For
There are a few red flags to watch out for when choosing a tax preparer. If your preparer does any of the following, it might be best to move on and find someone else to handle your return.
- Lack of Credentials or PTIN: Tax preparers must have a PTIN issued by the IRS. If a preparer refuses to provide their PTIN or lacks recognized credentials such as Enrolled Agent (EA), Certified Public Accountant (CPA), or attorney status, it could be a red flag.
- Unrealistic Promises of High Refunds: Beware of preparers who guarantee unusually high refunds before reviewing your financial information.
- Charging Fees Based on Percentage of Refund: Tax preparers who charge fees based on a percentage of the refund may have a financial incentive to inflate deductions or credits improperly. Fees should be transparent and based on the complexity of the return, not the size of the refund.
- Refusing to Sign as Preparer or Provide a Copy of the Return: Taxpayers should always receive a copy of their tax return and ensure that the preparer signs it. A preparer who refuses to sign the return or provide a copy may be engaging in unethical or fraudulent behavior.
- Encouraging Illegal Practices: Tax preparers who suggest or encourage taxpayers to take questionable deductions, credits, or other illegal practices should be avoided. Taxpayers are ultimately responsible for the accuracy of their tax returns, and engaging in illegal activities can lead to severe penalties.
- Lack of Availability or Accessibility: Tax preparers should be accessible and available to answer questions or address concerns throughout the year, not just during tax season. If a preparer is difficult to reach or unresponsive to inquiries, it may indicate a lack of professionalism or commitment.
- Refusing to Provide References or Previous Clients: Reputable tax preparers should be willing to provide references or connect prospective clients with previous clients who can vouch for their services. A preparer who is hesitant to provide references may have something to hide.
- Unwillingness to Explain or Educate: Tax preparers should be willing to explain tax concepts, answer questions, and provide guidance to taxpayers. If a preparer seems unwilling or unable to explain aspects of the tax return or related issues, it could be a red flag.
- Pressure to Sign Blank Forms or Documents: Taxpayers should never sign blank tax forms or documents or provide personal information without understanding the purpose or necessity. Preparers who pressure clients to sign blank forms or documents should be avoided.
- History of Complaints or Disciplinary Actions: Researching a tax preparer’s history for any complaints, disciplinary actions, or lawsuits can provide valuable insights into their reliability and professionalism. Government agencies, professional organizations, and online review platforms may offer information on a preparer’s track record.
Implications for Taxpayers
Choosing a reputable and competent tax return professional is crucial for ensuring compliance with tax laws and maximizing potential refunds. By considering factors such as credentials, fees, and professional affiliations, taxpayers can make informed decisions and minimize the risk of errors or fraudulent activities. The IRS’s guidance serves as a valuable resource for taxpayers navigating the process of selecting a tax return professional. By taking care and conducting due diligence in their selection process, taxpayers can achieve peace of mind knowing that their tax matters are in capable hands.