Most tax return preparers are professional, honest and provide excellent service to their clients. But if you pay someone to prepare your tax return, choose that preparer wisely, advises the IRS. Taxpayers are legally responsible for what´s on their returnseven if prepared by someone else.
Here are a few points to keep in mind when someone else prepares your tax return:
- A paid preparer is required by law to sign the return, fill in the preparer areas on the form and give you a copy of the return.
- Before signing, review the complete return to ensure the tax information and your name, address and social security numbers(s) are correct and that you understand the entries and are comfortable with the accuracy of the return.
- Never sign a blank return and never sign in pencil.
- If you have provided specific authorization in a power of attorney filed with the IRS, you may have copies of notices or refund checks mailed to your preparer or representative; but you are the only one that can sign and cash your refund check.
- A Third Party Designee Check Box on Form 1040 allows you to designate a representative to speak to the IRS concerning how your return was prepared or about payment and refund issues and mathematical errors.
If you choose to use a paid tax preparer, it is important that you find a qualified tax professional. Unqualified tax preparers may overlook legitimate deductions or credits which could result in you paying more tax than you should. They may also make costly mistakes that could end with you owing additional tax, along with penalties and interest.
Following are some suggestions to consider when hiring a tax professional:
- Avoid preparers who claim they can obtain larger refunds than other preparers, or who guarantee results or base fees on a percentage of the amount of the refund.
- Choose a preparer you will be able to contact after the return is filed and one that will be responsive to your needs. Ask questions and get references from clients who have used the tax professional before. Were they satisfied with the service received?
- Check to see if the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs, the state’s bar association for attorneys or the state’s Attorney General’s office.
- Determine if the preparer’s credentials meet your needs. Is he or she an Enrolled Agent, Certified Public Accountant (CPA) or Tax Attorney? Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection actions and appeals. Other return preparers may represent taxpayers only in audits regarding a return that they signed as a preparer.
- Find out if the preparer belongs to a professional organization that provides or requires its members to pursue continuing education and also holds them accountable to a code of ethics.
Unfortunately, unscrupulous tax return preparers do exist and can cause considerable financial and legal problems for their clients. Examples of improper actions by unscrupulous preparers include the preparation and filing of false income tax returns that claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions.
You can check IRS.gov for information regarding tax schemes and scams including abusive tax shelters. Tax evasion is both risky and a crime punishable by up to five years imprisonment and a $250,000 fine. Remember no matter who prepares your tax return, you are legally responsible for the information on it.
Report suspected tax fraud and abusive return preparers to the nearest IRS office, either by telephone at toll-free 1-800-829-0433 or in writing to the local IRS office.