How to Choose a Competent Tax Return Preparer

January 24, 2013

by Robert Askey, CPA

Now that we’ve entered the New Year it is the time that our thoughts begin to turn to filing our 2012 income tax returns. Should I prepare it myself? Or should I pay someone else to prepare it for me?

Self-preparation is an alternative for those who are numbers and computer literate, and have relatively uncomplicated circumstances. A word of caution to the self-preparer is not to rely too heavily on the software for all of the correct answers. The calculations that the software makes will be accurate, but the software relies upon accurate data input to insure tax return accuracy.

The tax law is now more complicated than ever, and as your income tax circumstances become more complicated you will need to seek help in preparing your income tax return. Do all income tax return preparers charge the same price? No. Are all income tax return preparers honest and ethical? Sadly no. Are all income tax return preparers equally competent in income tax return preparation knowledge and experience? Definitely not.

Complicating matters further, on Jan. 18, U.S. District Court Judge Boasberg ruled against the IRS and enjoined the IRS from enforcing the regulatory requirements for registered tax return preparers. As a result of this ruling there is no minimum educational or experience requirement, no testing requirement, and no continuing education requirement for individuals who wish to prepare income tax return for a fee. What this means to the public is that choosing someone to prepare your tax return who is qualified, competent, knowledgeable, and ethical is a task that needs to be entered into with the same amount care and concern you would take in selecting a heart surgeon.

So how should one go about selecting an income tax return preparer? Do your homework! Your best bet is to ask friends, family or business associates that you trust and respect for references of someone that they use and trust. Then assess the knowledge and experience of that preparer to determine if he or she has the qualifications to do your job properly.

Be sure to discuss and understand fee arrangements with the preparer up front. Some preparers offer fixed fee pricing and others base their fees on time. Never agree to engage a preparer who bases their fee on the size of your refund. This arrangement is strictly prohibited by the IRS.

Does the preparer offer you a satisfaction guarantee? If they don’t, you should consider an alternative. Professional tax return preparers go to great lengths to insure the accuracy of your return while simultaneously working to keep your taxes to the lowest legal level, and will generally provide a guarantee to that effect. Don’t settle for less.

Last, but certainly not least, be sure to review your professionally prepared return so that you know, understand, and agree with the information reflected on the return. You, the taxpayer, are the only party legally responsible for the information reported, or not reported in your return. You, the taxpayer, sign your return under penalty of perjury. The person preparing your return does not. So any errors or omissions, income understatements or expense overstatements, are ultimately your responsibility.

Robert Askey is a former Revenue Agent with the IRS and has since been a tax focused, Certified Public Accountant for more than 33 years. In addition to being a CPA, Mr. Askey is also a Certified Fraud Examiner and a Certified Forensic Financial Analyst. Mr. Askey is the Managing Member and Director of Forensic Financial Services with Askey, Askey & Associates, CPA, LLC with offices in Leonardtown and La Plata, MD.

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