Even the IRS Suggests Choosing a Tax Preparer Carefully

If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely and we at Abo and Company couldn't agree more. After all, taxpayers are legally responsible for what's on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.
 
Here are a few points to keep in mind when choosing someone else to prepare your return: 

1. 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. New regulations require all paid tax return preparers including attorneys, CPAs and enrolled agents to apply for a Preparer Tax Identification Number - even if they already have one - before preparing any federal tax returns in 2011.
   
2. Check on the preparer's history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Professional Responsibility for enrolled agents. 
   
3. Find out about their service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.
   
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 the April due date, in case questions arise. 
   
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.
   
6. Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.
   
7. Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it. 
   
8. Make sure the preparer signs the form and includes their PTIN.A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return. 

Perhaps it's a good time to remind our clients and friends of when we previously cited a Federal Tax Court Memorandum:
 
"Tax preparation software is only as good as the information one inputs into it...Taxpayers should also realize that the duty to file an accurate tax return generally cannot be avoided, for example, by shifting responsibility to a tax return preparer.  However, reliance upon the advice of a tax professional may establish reasonable cause and good faith for the purpose of avoiding a section 6662(a) penalty."

Oh yeh.  Thanks to Mark Kravitz here at Abo and Company for reminding us all to be alert to the provision of the 2010 Tax Relief Act which cut the 6.2% Social Security tax withholding rate on employee salaries from 6.2% to 4.2%. This change, for 2011 only, affects the first $106,800 of 2011 wages but the maximum savings equates to $2,136 for unmarried individuals and $4,272 for couples. The Social Security tax component of the self-employment tax is cut from 12.4% to 10.4% for 2011, so self-employed clients and friends of the firm will benefit as well. If you're working for an employer who does payroll manually and inadvertently missed implementing such, give Mark a call at extension 109.