Selecting a Tax Preparer
Selecting the right tax professional is enormously important. Taxpayers are ultimately responsible for the accuracy of their tax return, regardless of who prepares it.
There are numerous types of tax return preparers, including certified public accountants, attorneys, enrolled agents, and many others who do not have professional credentials. You hire a tax preparer to file your return accurately.
Most tax return preparers provide outstanding and professional tax services. Unfortunately, some taxpayers are scammed because they choose the wrong tax return preparer. Check our tips for choosing a tax preparer and how to avoid "ghost" return preparers.
What kind of tax preparer do I need?
Someone can be a paid tax return preparer as long as they have an IRS Preparer Tax Identification Number (PTIN). Tax preparers have different levels of skills, education, and expertise. Be sure to ask about their credentials before hiring.
How can I check a tax preparer's credentials?
The IRS provides a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications in your area. Additionally, many tax preparers belong to professional organizations.
What if I suspect a tax preparer is shady?
Tax return preparer fraud is a common tax scam.
The Arizona Department of Revenue (ADOR) is committed to investigating paid tax return preparers who act improperly.
ADOR protects taxpayers by assessing significant civil penalties against shady return preparers and working with the Attorney General’s Office to stop schemes and prosecute the criminals.
If a taxpayer suspects a tax preparer is shady, they should ask another tax preparer to review the return and get a second opinion.
Additionally, verify they are a reputable preparer and seek assistance through AARP Foundation Tax-Aide, Volunteer Income Tax Assistance (VITA), or 211 Information.
What are some tips to not get scammed?
- Select a tax preparer that is available year-round. If you have questions about the return, you can contact the tax preparer after tax season.
- Ensure the preparer has an IRS Preparer Tax Identification Number. Paid tax return preparers must register with the IRS, have a PTIN, and include it on the return.
- Ask if the preparer holds any licenses or designations. These include accredited tax preparer, accredited tax advisor, certified public accountant (CPA), enrolled agent, or registered accounting practitioner.
- Check their reviews and history to gather information on their performance and business practices. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association.
- Inquire about costs and service fees. Avoid preparers who base fees on a percentage of their client’s refund, and be cautious of preparers who boast about delivering bigger refunds.
- Withhold tax documents, social security numbers, or other information until you hire the tax preparer. Some scammers use this information to wrongly file returns without the taxpayer’s permission.
- Make sure the preparer offers e-file so you can electronically file the tax return. Paid preparers who do taxes for more than 10 clients generally must file electronically.
- Provide all your records and receipts. A proper preparer requests to see documents and confirms your total income, deductions, tax credits, and other items. Tax preparers should not use a pay stub instead of a Form W-2 to e-file a tax return.
- Direct any refund to your account, not the preparer’s bank account.
What questions do I ask before hiring?
- What kind of formal training does the preparer have and how current is the training?
- How long has the preparer been doing tax returns?
- Will the preparer explain how the return was prepared in the event of an examination by ADOR or the IRS?
- Did the preparer explain charges for services in advance?
- Does the preparer provide copies of complete returns to clients?
What are “ghost” tax preparers?
A ghost preparer is paid to prepare a tax return but does not sign it or include necessary information. ADOR warns taxpayers of possible scams if a preparer won't state their name on the tax return.
By law, anyone who prepares or assists in preparing federal and state tax returns for compensation must have a valid Preparer Tax Identification Number (PTIN). Paid tax preparers are required to sign and include their PTIN on the paper tax returns they prepare. For electronically filed returns, the preparer must list their name and PTIN.
By not providing the required information, it may appear the return was self-prepared, which benefits the ghost tax preparer by staying under the radar. Also, ghost preparers may promise a larger refund and charge fees based on a percentage of the refund, which is prohibited.
What are my responsibilities as a taxpayer?
- Ensure the tax preparer provides you with a copy of the entire return, including copies of all schedules, especially if there are itemized deductions or credits.
- Confirm you understand your return and ask to explain any deductions, credits, and wages claimed.
- Review the routing and bank account number on the completed return
- Ask the preparer to sign the return and list their PTIN.
- Review the tax return before signing and submitting to ensure numbers are correct and schedules add up to source documents provided to the tax preparer. Do not sign a blank or incomplete return.
- If affected by a shady tax preparer, you may need to file amended returns and be responsible for the additional taxes due along with interest. ADOR does not impose a monetary penalty on taxpayers who have been victimized by a tax preparer.