BBB Tips: How to Choose a Tax Preparer
February 21, 2011, Memphis, TN - Most tax professionals are qualified, reliable and honest, but some aren’t. Filing taxes is too important to not do your homework in selecting a tax preparer. Unqualified tax preparers may overlook legitimate deductions or credits that could cause taxpayers to pay more tax than they should or make costly mistakes causing their clients to incur additional penalties and interest.
“You - the taxpayer - are ultimately responsible for all information submitted to the IRS,” said Randy Hutchinson, BBB President. “Individuals should understand that when the IRS detects an inaccurate return, the taxpayer – not the tax preparer – must pay any additional taxes, interest, fees and penalties.”
According to one survey, the most common complaints about tax preparers include:
“We want to be sure that consumers know how to find trustworthy help in filing their taxes and we encourage them to not wait until the last minute. They need to take their time, shop around and find a preparer who is both qualified and has a strong track record of providing customer service to their clients."
- An error or mistake in the tax return, often requiring the consumer to pay fines or added fees to rectify the problem. (Nearly 33% of complaints)
- Tax preparers who were unresponsive to the client’s questions or requests for help. (20% of complaints )Many complainants noted that they were frantic as they faced filing deadlines or audits and were not receiving any help from their tax preparer.
- Other complaints included:
- A higher bill than expected.
- A refund was never received.
- The tax return was never filed.
BBB offers the following advice in choosing a tax preparer:
- Review the completed return to ensure all tax information, your name, address and Social Security Number(s) are all correct. Make sure that none of these spaces is left blank.
- Review and ensure you understand all entries on the forms and are comfortable with them before signing.
- Never sign a blank return. Never sign in pencil.
- Ask around. Get referrals from friends and family. Check the BBB Business Review on individual tax preparers free-of-charge at www.bbb.org.
- Look for credentials. A certified public accountant, tax attorney, or enrolled agent can represent taxpayers before the IRS in all matters, including an audit. Also, find out if the preparer is affiliated with a professional organization that holds its members to a code of ethics.
- Be wary of any tax preparation service that promises larger refunds than the competition or who base their fee on a percentage of the refund.
- Think about accessibility. Choose a preparer you will be able to contact and who will be responsive to your needs. Some tax preparation services only set up shop for the months leading up to April 15th. If the IRS has questions or schedules an audit, consumers need to be able to contact their tax preparer throughout the year.
- Ask who will actually prepare the return and avoid firms where work may be delegated down to someone with less training or some unknown worker.
- Read the contract and know what you’re paying for. Understand how much the service costs, how the cost will be affected if preparation is more complicated and time consuming than expected, and whether the tax preparer will represent you in case of an audit and how much that will cost.
- Remember that it’s illegal for tax preparers to encourage you to falsify deductions, exemptions or income in order to pay less tax or obtain tax credits. If they ask you to sign a blank or incomplete form or guarantee that you won’t be audited, go elsewhere.
- Investigate whether the tax preparer has any questionable history with the Better Business Bureau, the state’s Board of Accountancy for CPA’s, your state’s Bar Association or Board of Professional Responsibility for attorneys, or the IRS Office of Professional Responsibility for other enrolled agents.
- Get free help through the IRS’s Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs. Information can be found on the following sites:
- If the tax preparer offers you a Refund Anticipation Loan, understand that it’s a high cost advance against your own money. If your refund is delayed or reduced, you’re still responsible for repaying the loan and additional interest that may accrue.