Many tax preparers engage in seasonal work from January through April, and then they may be nowhere to be found. Obviously, given the nature of tax season, we need seasonal tax preparers to handle the volume of work that doesn’t carry on throughout the year. However, the high, but brief demand can attract practitioners who are not very experienced or worse yet, who are not very ethical. Whether their mistakes are unintentional or diabolical, the taxpayer is usually left with the costs.
Protect Your Financial Information from Fraud
The Internal Revenue Service annually cautions taxpayers to do their due diligence when selecting a tax preparer. One of their main concerns relates to the sensitive nature of personal and financial information that can be mishandled or intentionally used in scams resulting in identity theft and fraud. Another reason taxpayers should screen their professionals carefully is that taxpayers are legally responsible for all of the information on their tax returns.
Look for These IRS Warning Signs
The IRS provides a number of warning signs to be on the lookout for. Some of the most crucial warnings include the following:
- First, check to see if the preparer has a valid Preparer Tax Identification Number (PTIN). Anyone who is paid to prepare taxes is required by law to have a valid PTIN and include it on the return along with their signature.
- Tax preparers should sign your tax returns they prepare. The IRS identifies “ghost” preparers as those who print their work and have the client sign and return it. They will also refuse to digitally sign electronically signed returns. If preparers are reluctant to sign their work, you might not want to trust them.
- Be wary of tax preparers that charge based on the size of your refund. Paying preparers based on the refund incentivizes them to increase your refund beyond what is warranted.
- Never sign an incomplete or blank return. You are responsible for the information on the return.
In addition to the above red flags, the IRS offers other criteria to help taxpayers choose a preparer.
Criteria to Help Select a Tax Preparer
- Having a preparer that is available all year helps if any questions or problems arise.
- You should review the company’s credentials and history. In addition to having a valid PTIN, which you can check here, Attorneys, CPAs, and Enrolled Agents each have their own licensing authorities, which you can check online.
- Watch out for service fees for larger refunds or for unwarranted services such as having the refund deposited in the preparer’s financial account.
- Good preparers should ask for documentation of expenses and credits, and they should work with your Form W-2 instead of unofficial paystubs. If they don’t ask for receipts and records, you might be asked to justify your claims in a resulting audit.
- Review all of the information on the return before you sign it. Double check your financial information to make sure any refund will end up in your account and not somebody else’s.
Although we do not file tax returns as a stand-alone service, Accelerated Tax Solutions does prepare taxes for all of clients who also need to either file or amend an original tax return in order to reach compliance or challenge a substitute for return by the IRS.