Tax season is one of the most dreaded because many American taxpayers do not know where to look for help. Thankfully, the Internal Revenue Service offers a litany of frequently asked questions and answers under the heading of “Tax Topic Index.” This Index is intended to clarify the complex tax preparatory process that has a tendency to confuse American taxpayers. Among the topics the IRS covers are frequently committed errors (Tax Topic 303), “Types of Income” for how to account for all streams of income (Tax Topics 400-431), and tax deductions (Tax Topic 500-515). Perhaps the most foundational and critical tax topic is common sense methods for choosing an accountant (Topic 254). Reading about these tax how-to’s may help make choosing a professional tax preparer easier and less intimidating.
Tax Topic 254 “How to Choose a Tax Return Preparer”
In most cases, tax preparers (typically accountants) have a responsibility to sign off on your tax return. Just like doctors, lawyers, teachers, realtors, and members of many other professions, accountants are licensed. Their professional responsibility is to prepare your tax return as accurately and completely as possible. It goes without saying that no tax preparer can accurately prepare your taxes without all of the information necessary. Before asking someone, ideally a licensed professional, to sign off on your tax return, be sure to provide them with all of the requisite information. If you are confused or have questions, please ask. If your preparer does not know the answer, check with the IRS or ask another licensed professional.
Common Sense Tax Advice
The IRS offers simple and common sense advice on how to choose a tax preparer. For example, they recommend that a preparer proffering a substantially higher tax return than other licensed professionals may be doing so inaccurately, and should in most cases not be retained. Also, routinely, tax preparers should charge a fee based on the number of hours spent in the preparatory phase, not based on the amount of your expected return. Tax preparation is a service that is based on hours of work and most should not be offered on a sort of commission basis.
The IRS further suggests that, much like any smart consumer, tax payers should check the credentials of the tax preparer to ensure they are reputable and do not have any concerning blemishes on their record.
How to Choose a Tax Preparer
It is likely that disreputable preparers will not remain in the same place of business for a lengthy period of time. For example, they reason “Consider whether the individual or firm will be around months or years after the return has been filed, to answer questions about the preparation of the tax return.” If the preparer is going to establish a new place of business every tax season, there may be an uncomplimentary reason for doing so that might cause a tax payer to seek other assistance.
“Ensure you use a preparer with a preparer tax identification number (PTIN). Paid tax return preparers must have a preparer tax identification number to prepare all or substantially all of a tax return.” This advice goes hand-in-hand with the preparer’s professional decision to sign off on a tax return. The IRS governing rule is that anyone that prepares or helps prepare a tax return must possess a valid PTIN. This provides a measure of protection to/for tax payers.
Tips for Choosing a Tax Preparer
At the end of the day, choosing a tax preparer is about trust, professionalism, and record. If the tax preparer is courteous and open that is a positive step toward earning your business and trust. A professional preparer will likely have a place of business that you can frequent all year long in order to ask questions and establish a rapport. A tax preparer with a strong record of consistency will be someone that can help you in times of need.
Folks, the IRS offers many practical tips for how to best prepare your taxes. Topic 254 is just the beginning. For more information please visit http://www.irs.gov/taxtopics/.