Do Your Homework When Picking a Tax Preparer

Do your homework. A PTIN doesn’t signify an IRS endorsement; it merely provides proof that a tax professional has IRS authorization to prepare tax returns. Filers should check with the Better Business Bureau, state accountancy board and bar association to help research accountants and attorneys for possible complaints. Information on enrolled agents — licensed practitioners who can also represent taxpayers in IRS audits, appeals and collections — can be verified by emailing epp@irs.gov.

Ask lots of questions. Consulting someone who has an accounting degree or a specialty in tax law doesn’t necessarily mean you’ll get the best tax advice. Ask about their background and experience and if their skills match your needs. Other questions to ask: Are they up on the latest tax code changes? Can they provide references? What continuing education courses have they taken? If you are audited or your return is rejected, will they be there for you?

“People assume there’s a level of competency and that most professional tax preparers have some appropriate background,” says National Consumer Law Center attorney Chi Chi Wu. “But in 45 states, they aren’t required to meet any minimum educational, competency or training requirements.’’

Only California, Connecticut, Maryland, New York and Oregon have competency standards.

Avoid promises of fat refunds. You should be suspicious of anyone who tells you they can get you a big refund before even looking at your income and financial situation. “Definitely a red flag,’’ says Lemons. “They just want to get your business.” 

Determine what and how you’ll be charged. Some tax preparers bill by the hour. Others offer a flat fee, which can vary by the complexity of the return. Beware of those whose compensation is based on the size of your refund, consumer advocates say. An unscrupulous tax preparer could pad your refund by taking extra exemptions or tax credits, overstating charitable contributions and filing for deductions you don’t deserve.

Ask if they’ve been hacked. There’s been an upswing in cyberthieves targeting tax professionals. Some pose as IRS employees or potential clients seeking to trick tax professionals into disclosing sensitive data.

Others use phishing schemes, with email links or attachments that contain malicious software. After fraudsters gain access to secure accounts or data, they use the stolen information to impersonate taxpayers, filing fraudulent tax returns under their names for refunds. IRS warnings and hacks have prompted many tax professionals to bolster security measures to prevent breaches and hacks, but it pays to check. 

See if the tax pro can file your return early. You’ve got until April 17 to file your tax return this year — two days longer than usual. But the earlier you file, the less time cyberthieves have to file a bogus return and claim a refund under your name. In the 2017 data breach at credit bureau Equifax, hackers gained access to Social Security numbers and personal information of 145 million people.

If someone’s already filed a return using your Social Security number, yours will be rejected. That would delay your refund until the IRS investigates, a process that could take more than a year.

Review your return before it's filed. Even though you may have confidence in your tax professional, never sign a blank return. In checking your return before it’s filed, see if the income numbers match up to your W-2 forms and if the exemptions and other information are accurate. “It pays to be a well-educated consumer,’’ Lemons says.  

Older Americans and other tax filers may also have several sources for free income tax preparation help, including the AARP Foundation Tax-Aide program, which kicks off this week. Protecting the confidentiality and security of taxpayer data has always been a priority for Tax-Aide and its volunteers. But most free tax services and software providers set income limits on filers or don’t provide advice or income tax preparation on complex tax returns.