Taxpayers should know what they’re getting when they choose a tax preparer

Tax Tip 2022-144
September 20, 2022

It’s filing extension crunch time, but people rushing to get their tax return filed should be cautious when choosing a tax preparer. Anyone can be a paid tax return preparer if they have an IRS preparer tax identification number. However, tax pros have different levels of skill, education and expertise.

 

A taxpayer’s needs will determine which kind of preparer is best for them. Most tax return preparers provide outstanding and professional tax service. However, each year, some taxpayers get burned by tax preparers who are unreliable or unethical. The bottom line is that taxpayers are responsible for the info on their return, regardless of who prepared it.

 

To choose a tax preparer who will meet their needs, taxpayers should:

 

• Check the IRS Directory of Federal Tax Return Preparers.This searchable and sortable public directory helps taxpayers find a tax return preparer with specific qualifications.
• Check the preparer’s history with the Better Business Bureau.Taxpayers should check for any disciplinary actions for credentialed tax return preparers. For CPAs, taxpayers should check with the State Board of Accountancy. For attorneys, they should check with the State Bar Association. For enrolled agents, they can verify the agent’s status on IRS.gov.
• Ask about fees. Taxpayers should avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts. They should be wary of tax return preparers who claim they can get larger refunds than their competitors.
• Ask if the preparer plans to use IRS Free File. Taxpayers should make sure their preparer offers to electronically file their tax return using IRS Free File.
• Make sure the preparer is available. Some tax preparers only work on a seasonal basis. Taxpayers should consider whether the tax return preparer will be around after the filing deadline has passed. Taxpayers should do this because they might need the preparer to answer questions about the preparation of the tax return.
• Ensure the preparer signs and includes their preparer tax identification number. Paid tax return preparers must have a PTIN to prepare tax returns. Preparers must also sign returns and include their PTIN.
• Understand the preparer’s credentials. Enrolled agents, CPAs, and attorneys have unlimited practice rights and can represent taxpayers on any tax matter before the IRS. However, tax return preparers who participate in the IRS Annual Filing Season Programhave limited practice rights.  They must have prepared and signed the tax return and can only represent the taxpayer for Taxpayer Advocate Service and customer service activities, only before any examination of the tax return.