Find a good tax preparer

Wed Feb 4, 2009, 11:28 am | Leave Comment

Taxes Update

In a limited study of tax returns completed by unlicensed paid preparers, 17 out of 28 – or 61% – were prepared incorrectly, including one that showed the taxpayer owing $4,903 more than he really did, according to a study by the Treasury Inspector General for Tax Administration (TIGTA), which provides independent oversight of IRS activities.

While most of the mistakes resulted in an underpayment of taxes or a too-big refund, sometimes it was the taxpayer, not the government, who would have paid for the mistake, according to a study by TIGTA auditors.

The study focused on unlicensed and non-enrolled preparers, specifically those who were not certified public accountants, enrolled agents or tax attorneys. Enrolled agents must pass an IRS test and are essentially approved by the IRS to practice.

There are an estimated 800,000 non-enrolled and unlicensed tax preparers, according to the National Association of Tax Professionals, which represents tax preparers both licensed and unlicensed.

The problem is anyone – regardless of training, experience, skill or knowledge – is allowed to prepare federal income tax returns for others for a fee. Only two states, California and Oregon, require these preparers to register with state agencies and meet continuing-education requirements. Currently, proposed bills in the U.S. House and Senate aim to better regulate tax-return preparers.

Do your own research
Given that taxpayers are ultimately responsible for the information filed on their return, it is extremely essential that consumers be careful when hiring a paid tax preparer, whether licensed or not. Even licensed professionals may make mistakes.

Whether you go with a licensed or unlicensed preparer, it’s important to assess whether there are any complaints against that person. That’s easier to do when the tax preparer is licensed or registered with a state or other agency.

Check the paid tax preparer with the following: