The Internal Revenue Service today reminded taxpayers that choosing the right tax professional is essential to helping them avoid tax-related identity theft and financial harm.
While most tax return preparers are trustworthy and provide high-quality service, some engage in fraud, identity theft and scams. Taxpayers must understand who they’re hiring and ask the right questions before handing over their sensitive personal and financial information.
Remember: Taxpayers are legally responsible for the accuracy of their income tax return, even if someone else prepares it.
IRS tools available to help taxpayers choose wisely
The IRS provides important resources to help taxpayers make informed decisions.
- The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find a tax pro who meets high standards.
- There’s also a dedicated page on IRS.gov which offers guidance for Choosing a tax professional, including tips on choosing a reputable preparer, how to avoid unethical preparers and the various types of tax return preparers available. Taxpayers should consider their unique needs to determine which kind of preparer is best for them.
Free tax preparation
The IRS offers free filing options to file electronically. Eligible individuals and families can also get free help preparing their tax return from IRS-certified volunteers at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. Taxpayers can generally qualify for VITA services if they earn $67,000 or less. TCE sites also offer free tax help but with priority assistance to people who are 60 years of age and older. To find the closest free tax help site, use the VITA Locator Tool or call 800-906-9887.
Red flags
It’s important for taxpayers to recognize red flags when choosing a tax professional.
“Ghost” preparers – Be wary of anyone who won’t sign the tax return as the paid preparer and asks the taxpayer to sign and file the return themselves. The IRS requires tax preparers to sign returns and not doing so is a red flag and may signal fraud. These “ghost” preparers may be looking to make a quick profit and promise large refunds or charge fees based on the refund amount.
These unscrupulous “ghost” preparers often print the return and have the taxpayer sign and mail it to the IRS. For electronically filed returns, a “ghost” preparer will prepare the tax return but refuse to digitally sign it as the paid preparer. Taxpayers should avoid this type of unethical behavior as it can indicate fraud.
Valid ID for tax preparers – Taxpayers should always choose a tax preparer with a valid Preparer Tax Identification Number (PTIN). By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid PTIN. Paid preparers must sign and include their PTIN on any tax return they prepare.
Tips for choosing a tax return preparer
Here are some additional tips to consider when choosing a tax professional.
- Look for a preparer who’s available year-round. Questions may come up about a tax return after filing season ends and it’s helpful to contact the preparer when needed.
- Review the preparer’s history using the Better Business Bureau website. Look for disciplinary actions and the license status for credentialed preparers. For CPAs, check the State Board of Accountancy’s website, and for attorneys check with the State Bar Association. For enrolled agents go to IRS.gov and search for “verify enrolled agent status” or check the IRS Directory of Federal Tax Return Preparers.
- Discuss service fees upfront. Avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own accounts. Be wary of those who claim they can get larger refunds than their competitors.
- Find an authorized IRS e-file provider. They are qualified to prepare, transmit and process e-filed returns. Filing electronically and choosing direct deposit can result in faster refunds, often within 21 days.
- Provide records and receipts. Trustworthy preparers will request proper documentation and ask questions to determine the client’s total income, deductions, tax credits and other relevant details. Do not hire a preparer who e-files a tax return using a pay stub instead of a Form W-2. This is against IRS e-file rules.
- Understand the preparer’s credentials and qualifications. Attorneys, CPAs and enrolled agents can represent any client before the IRS in any situation. Annual Filing Season Program participants may represent taxpayers in limited situations if they prepared and signed the tax return.
- Never sign a blank or incomplete return. Taxpayers are responsible for filing a complete and correct tax return.
- Review the tax return carefully before signing it. Be sure to ask questions if something is not clear or appears inaccurate. Any refund should go directly to the taxpayer – not into the preparer’s bank account. Review the routing and bank account number on the completed return and make sure it’s accurate.
Report tax preparer misconduct
Taxpayers can report suspected preparer misconduct to the IRS using Form 14157, Complaint: Tax Return Preparer