Getting it right
Five days ago I read a post on a topic that is of interest to everyone. The author of course responded to my comment. AN up and coming CPA/tax blogger gave a note where, of course, the author responded, and I put in another two cents worth. At this point, a new voice entered with a statement and some questions.
I hope now to answer those questions, and maybe a few others.
This all started simply enough because of a 2003 Study. Findings were such that CPA Prepared Returns Result in Fewer Audit Adjustments than Returns Prepared by Non-CPAs
I made the comment that maybe this study was not entirely accurate. Not because of the study itself, but because taxpayers blindly believe that a person with CPA behind their name means they are tax preparation experts.
For the record, just so you know, just because somebody has CPA behind their name, this does not make them a “tax professional”.
In a post from another tax blogger, she was thinking about all the fancy credentials the AICPA offers for CPAs to specialize – financial planning, fraud examination, business valuation – and wondered how to become a certified tax expert. A representative of the AICPA (American Institute of Certified Public Accountants) responded to this saying, “We do not offer a credential in taxation. In general, our approach has been not to develop credential programs around areas for which the public already believes CPAs to ‘own’.”
As I read this I was amazed that someone representing the AICPA actually admitted that the general taxpaying public blindly believes that just because someone is a CPA they own the title of tax professional.
Again, A CPA designation does not by itself qualify as tax expert. Other than EA (Enrolled Agent), there is no real designation available to be obtained to verify or prove a Tax Preparation Professional. There needs to be.
I suggested then that we needed to educate taxpayers in the difference of just a CPA and a tax professional (who by the way could be a CPA).
As it was pointed out to me, who would pay for this, who should or would be charged with this responsibility?
The comment that sparked this post – “I think the industry should accept that it has taken certain missteps along the way and repair that. . .”
In an annual report by National Taxpayer Advocate, Nina Olson said that she would work with the Inspector General for Tax Administration to develop regulations for presently unregulated (commercial preparers who are not attorneys, CPAs or enrolled agents) tax preparers.
To me this is misleading. I mean it is being proposed that those who are not attorneys, CPAs or enrolled agents aren’t regulated. When in fact they are governed by the same rules as those preparers as who are attorneys, CPAs and enrolled agents. (We are talking about what is commonly referred to as an un-enrolled preparer.)
So to clarify, According to Circular 230 (Circular 230 contains the regulations governing the practice of attorneys, certified public accountants, enrolled agents, enrolled actuaries, and appraisers before the IRS.) a preparer is defined as “An individual who prepares and signs a taxpayer’s tax return as the preparer, or who prepares a tax return” And preparers are governed by the regulations described in Circular 230, including ethics.
If you are an Attorney, CPA, EA you are afforded more mobility within the IRS to act on a taxpayers behalf as also described and regulated by Circular 230.
As it stands right now, anyone can claim to be a tax preparer. There are no guideline as to education requirements, or continuing education requirements. This concerns people, as it should.
I am considered an un-enrolled preparer. By all means I am all for a change. Somewhere somehow there needs to be some sort of something, be it college education and designation or Federal licensing. There needs to be something. To assume this needs to only be done for un-enrolled preparers is pompous.
Any preparer, whether you are un-enrolled, a CPA, an Attorney, and EA, whatever they are, there needs to be something for everyone who signs as a preparer. A standard for all who assist taxpayers in the preparation of their return.
Find a Tax Preparer that is right for you
When opening your mail in January and February, you probably will receive a lot of documents with descriptions and/or warnings about this information being “Important Income Tax Information!” Soon you will have to decide how to deal with last year’s income tax situation.
So, do you try to prepare and file your own income tax returns, or are you thinking about hiring a tax professional?
If you are thinking about hiring a tax professional ask yourself “why would or do I need a tax preparer”. If you feel that you need a preparer there are four basic needs for tax preparation services:
1. speed,
2. accuracy,
3. creating a customized tax strategy, and
4. managing a complex tax situation with accuracy and professionalism.
Everyone wants their tax returns to be accurate. All tax professionals, even those at national franchises, should guarantee the accuracy of their work.
If you have a particularly complicated tax situation, you should seek a tax professional with substantial experience to help you.
If having your taxes done quickly is most important, you’ll probably go to one of the nationwide tax franchises. Although I don’t recommend this, the employees at these companies are trained to get your taxes done quickly. Every year I hear from new clients and non-clients who are/were dissatisfied at the level of accuracy and professionalism encountered there.
Tax laws can be complicated and usually change from year to year, so it’s important to find a preparer who has the knowledge and experience to prepare your returns correctly. A lot of states do not require tax preparers to be licensed; however, many preparers are licensed, certified, and belong to professional organizations that require a certain level of education. Find one of those.
Also, services vary considerably from preparer to preparer, so you’ll also want to find one who offers the services you need.
Before you hire a preparer, call around to a couple of tax offices and take the time to ask these questions:
What kind of formal tax training do you have?
Do you hold any professional licenses or designations, such as certified public accountant (CPA)?
Do you belong to any professional organizations?
Do you take continuing professional education classes each year?
How long have you been preparing tax returns?
Have you ever done a tax return dealing with my situation?
Are you open for business year-round?
Have you ever been disciplined by any government authority for malpractice?
Are you authorized to and will you represent me in an audit or collection matter with the IRS or state Department of Revenue if necessary?
How much do you charge, and how do you calculate your fees?
Ask what their price range is. Prices for tax preparation will vary depending on how complex your tax return is. Some professionals charge by the hour, or by how many tax forms you need to fill out, or even a flat fee for all work.
Ask about any guarantees the tax preparer offers. The tax preparer should be willing to guarantee the accuracy of the returns, be willing to amend the tax return if there was a mistake in the tax prep, and be willing and able to assist you in an IRS audit.
Also, be careful of tax preparers who claim to know “the secrets” of obtaining unusually large refunds. Most preparers charge rates based on their time or the complexity of your return, and you should avoid anyone whose fees are based on a percentage of your refund. (This practice is illegal.) Incase questions arise after your return has been filed, find out if, and where, your tax preparer can be contacted in future weeks or months.
Never sign a blank tax form for any preparer.
Remember that you are ultimately responsible for your tax return, so be sure to choose your tax preparer carefully. If you want to find competent, licensed tax professional I suggest you visit The IRS web site Authorized IRS e-file Providers for Individuals then/or go to Search the NATP Member Directory, then call around and ask questions.
Friends and family can be of additional assistance.
What You’ll Need:
◊ All your current year tax documents
◊ Photo identification
◊ Social Security cards for yourself and your dependents
◊ Checkbook for direct deposit of your refund/direct debit for any amount due
◊ Copy of last year’s tax return
Tip: Little known fact is that local CPAs and EAs and other Tax professionals charge only slightly more than a franchise service and will provide much more personalized service.
Tip: Be sure to ask if your preparer is an enrolled agent (EA), CPA, or has received advanced tax training.
Tip: All tax professionals specialize. Find a CPA or EA who has the experience, knowledge, and skills you are looking for.
Tip: Some franchises will try to sell you an enhanced guarantee to cover additional taxes and penalties in case of an audit. This is practically a guaranteed profit for the franchise.
Some more Tips:
¤ A CPA is a professional accountant licensed by the state. Best for corporate accounting, tax audits, and business consulting.
¤ An Enrolled Agent is a tax professional licensed by the IRS. Best for complex tax issues, tax audits, and responding to tax collectors.
¤ A Tax Preparer may be registered by the state. Best for straightforward tax returns.
¤ The national Tax Franchises are H&R Block, Jackson Hewitt, and Liberty Tax. With offices nationwide. Often fast, courteous, and convenient. But some employees will be less trained than others. Be sure to ask for a senior-level tax preparer.
Expect to pay from $150 to $450, depending on how complicated your tax return is.
Prepare your taxes on-line With L & R Tax Preparation
L & R Tax Preparation
Tax Preparation, Payroll, and Accounting,
Including online services.
E=MC2 or use QuickBooks
