Consumers – Beware of Shady Tax Preparers
Every year at tax time, the IRS puts out a warning to taxpayers about the threat of suspicious tax return preparers. The vast majority of preparers are trained professionals who have their clients’ best interests at heart. Unfortunately, there are some individuals who will try and take advantage of unsuspecting taxpayers using a number of different methods.
Some of the ways that these criminal tax return preparers take advantage of their clients include identity theft, refund fraud, overcharging and other scams. These scams cost victims millions of dollars every tax season. For many people, the refund they get from the IRS is one of the biggest financial payments they will receive all year, and losing it to criminal preparers can be a devastating blow.
Roughly 60 percent of Americans make use of professional help to file their tax returns. If you are among them, you need to do everything possible to make sure that the person you hire is a competent professional whom you can trust. To help ensure this, follow these seven tips to make sure you avoid falling victim to shady tax return preparers:
1. Check for a PTIN
The first step to make sure that you are dealing with a trustworthy tax return preparer is to ask them for a PTIN number that is valid for 2015. PTIN stands for Personal Tax Identification Number. Any individual who has one of these numbers is authorized by the federal government to prepare tax returns for others.
However, just because someone has one of these numbers, it doesn’t mean that you should hire them. There is a wide range of skill and expertise displayed by the individuals who have a PTIN. Not everyone who has one will be right for your individual needs. If you need help deciding on what kind of person to look for, the IRS has a helpful page describing the different types of tax return preparers at IRS.gov/chooseataxpro.
2. Ask for the Preparer’s Qualifications
When you are filing a tax return, the knowledge of your tax preparer could mean a difference of hundreds, thousands or even tens of thousands of dollars. When you are dealing with this much money, it is crucial that you hire someone who has the proper amount of education and qualifications to handle your return expertly.
To ensure this, make sure that you ask any potential preparers for their qualifications before you hire them. Some of the qualifications you should look for are law degrees, public accounting certifications and continuing education classes. When you find a preparer who has a high level of education, you can more confidently count on him or her to understand the many complexities of the federal tax code.
3. Make Sure the Fee Is Fair
Before you choose someone to prepare your taxes, make sure that you understand the fee that will be charged upfront. You should never agree to pay a fee that is based on a percentage of your tax refund. Instead, look for a preparer who offers a flat fee.
4. Watch out for Bold Claims
If a tax return preparer is trustworthy, he or she will not make any outlandish claims about being able to get you a bigger refund than any other preparer. The preparers you can trust do not have to rely on these bogus sales tactics. Their excellence speaks for itself, and they will always have business because of the quality of the work that they do.
5. Make Sure the Refund Comes to You
If you encounter a tax return preparer who wants the refund to go to his or her bank account rather than yours, run for the door as fast as you can. Your tax refund should always go directly to your bank account.
6. E-File Is the Only Way to Go
If preparers do not use e-file, then they are not living in the 21st century and should be avoided. E-file is the only method you should accept for filing your tax return. It is the cheapest, safest and most efficient way to file your return. Also, federal law requires any preparer who files more than 10 returns to use e-file. Any preparer who isn’t using e-file doesn’t get much business.
7. Ensure They Will Be There When You Need Them
Lots of tax preparers like to take a vacation after the madness of tax season, which is understandable. However, they also need to be available to you if you have a question about your return after April 15. You should quiz any potential tax return preparer about his or her availability after tax season before you hire him or her.
If you follow these seven tips, you should have no problems finding a trustworthy individual to prepare your tax return; however, even trustworthy individuals can make mistakes. You should always look over your tax return carefully before you sign it. If you choose a quality preparer and check the work he or she does, your return will be as good as it can be.
With some luck, this article got you thinking about how to advise clients properly and build their trust. They will be the best source of referral business for you, and you need to protect them from going to other tax preparers who may promise them a “better deal”.
Also, if you’re not doing electronic tax filing on their behalf, you should. If you efile 1099 and other tax forms for them, your customers should receive their refunds much faster.
I would also suggest that you follow my lead if you’re still mailing tax forms. I use eFile4Biz.com to file 1099 online. The time saved allows me to focus on clients. This service also “talks” with the major software brands, including printing and delivering tax forms for me. Their short video below explains it all.