As the end of the year approaches, taxpayers again need to start thinking about compiling their records in order to prepare their income tax returns. At the same time, taxpayers also may need to consider the selection of a tax return preparer. Taxpayers must use care and caution when choosing a tax preparer. Remember, you are legally responsible for what’s on your tax return even if it was prepared by an another individual or firm.

Most tax return preparers are professional, honest and provide excellent service to their clients. However, unscrupulous tax return preparers do exist and can cause considerable financial and legal problems for their clients.  Therefore, it is important to find a qualified tax professional.

The following tips will help you choose a preparer who will offer the best service for your tax preparation needs.

1. Check the preparer’s qualifications. Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics. Remember that not all tax preparers are CPAs. Verify clearly the preparer’s qualifications (or the firm’s qualifications) to prepare tax returns, and understand the differences between a CPA (Certified Public Accountant), enrolled agent, and unenrolled tax return preparer. Inquire also if the return preparer is authorized to E-file your return, i.e., able to file the return electronically with the IRS. E-file is commonly available among tax preparers today, and enables the return to be filed with less chance of loss or delay. E-file also generally reduces the time for refunds, and can help decrease the chance of undeliverable refund checks.
2. Check on the preparer’s history. Check to see if the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs or the state’s bar association for attorneys.
3. Find out about the preparer’s fees. Avoid preparers that base their fee on a percentage of the amount of your refund. This may give an unscrupulous preparer the incentive to enter inappropriate or inaccurate entries on the return which may maximize a refund but ultimately expose you to even greater tax, penalties and interest if reversed by the IRS. Also be wary of preparers who broadly claim that they can obtain larger refunds than other preparers. While more knowledgeable or more skilled tax preparers generally can maximize available tax benefits, broad claims of producing larger refunds often are greatly exaggerated or based on unique or very specific factual circumstances that may not apply to you.
4. Make sure the tax preparer is accessible. Make sure you will be able to contact the tax preparer after the return has been filed, even after April 15, in case questions arise. Inquire also the extent to which the preparer or the preparer’s firm will be available to advise you or is authorized to defend you or the return if the return is selected for examination by the IRS.
5. Provide all records and receipts needed to prepare your return. Most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items. Be wary of a preparer that ignores obvious sources of income in your records or encourages you to claim expenses which you cannot support with proper documentation. If any unreported or under-reported income later is discovered by the IRS, or if any undocumented expenses later are reviewed and reversed by the IRS, this could expose you to additional tax and interest, and potentially also expose you to accuracy-related penalties.
6. Never sign a blank return. Avoid a tax preparer that asks you to sign a blank tax form. Although this may seem convenient to help you file your return quicker, this is improper. A blank signed return sometimes also is a method which unscrupulous preparers use to cheat taxpayers by entering bogus expenses that create fraudulent refunds, refunds which the unscrupulous preparers then later misappropriate to themselves. Although such tax return-related scams by fraudulent preparers are relatively uncommon, they do occur, and taxpayers have a duty to guard themselves from falling victim to such schemes.
7. Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure that you understand everything and that you are comfortable with the accuracy of the return before you sign it. Although you may have recourse against a preparer that enters inaccurate information on your return (either intentionally or unintentionally), you generally cannot avoid accuracy-related penalties imposed by the IRS for those mistakes.
8. Make sure the preparer signs the form. A paid preparer must sign the return as required by law. Although the preparer signs the return, you still are responsible for the accuracy of every item on your return.  The preparer must also give you a copy of the return.

As one additional tip, be careful of offers from tax preparer firms to advance you money against an expected refund so that you can get your money faster. The fees associated with these loans or advances often are very high (even compared to regular credit card interest rates), and thus are not worth the small burden of waiting several additional weeks to receive the full refund. If you are concerned about getting a refund sooner, avoid the late rush and file as early as possible in the tax filing season, and consider using a tax preparer that uses E-file to expedite the filing of the return and the processing of your refund.

If you suspect an abusive tax preparer or suspect tax fraud, you can report your suspicions to the IRS on Form 3949-A, Information Referral or by sending a letter to Internal Revenue Service, Fresno, CA 93888.  Form 3949-A also is available from the IRS website at www.IRS.gov or ordered by mail by calling 800-829-3676. Taxpayers also can check the following link from the IRS website, Where Do You Report Suspected Fraud Activity?

If you know other people who are searching for a tax preparer, or who may have questions in choosing a tax preparer, help them out by passing them this article.