Filing taxes is a process that many Americans leave up to professional tax preparers, but as numerous taxpayers have found over the years, even the professionals mess up sometimes.
According to the Internal Revenue Service, 80 percent of Americans rely on professional tax preparers or tax software, and the Better Business Bureau of Arizona is encouraging taxpayers to use caution when choosing tax preparers.
“Even though the tax preparer completes the return, it’s the taxpayer who is ultimately responsible for the return’s accuracy and whether or not it’s filed on time,” said Matthew Fehling, Better Business Bureau president. “The fines, fees and hassles can mount if you choose an unreliable tax preparer and that’s why it’s important to do your research.”
Linda Cotter, owner of LC Accounting Services in Ahwatukee Foothills, is entering her 24th tax season. She also urges taxpayers to choose their tax preparers wisely.
“You should have an experienced tax preparer who knows what the legitimate tax deductions are,” Cotter said. “I always suggest finding out how long they have been in business because there is no tax preparer licensing in Arizona.”
There are four different groups certified to file taxes by the IRS, and they include CPAs, tax attorneys, enrolled agents (generally ex-IRS agents) and tax preparers.
“People in the tax preparer group could be your neighbor who bought TurboTax software and charged you to do your taxes,” Cotter said. “The tax preparer should do a very clear interview with the taxpayer to determine what legitimate deductions they have.”
Cotter said taxpayers should know before choosing their preparers if they ever have faced IRS penalties.
“I’ve never had a penalty in all my 24 years in practice,” Cotter said, “and that is something taxpayers should ask the preparers before they give them their business.”
The Better Business Bureau offers these tips to locate a good tax preparer:
• Ask around.Get referrals from friends and family on whom they use and check the BBB Reliability Report on tax preparation services at www.bbb.org.
• Look for credentials.Ideally, your tax preparer should either be a certified public accountant, a tax attorney or an enrolled agent. All three can represent you 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.
• Don’t fall for the promise of a big refund.Be wary of any tax preparation service that promises larger refunds than the competition and avoid any tax preparers who base their fee on a percentage of the refund.
• Think about accessibility.Many tax-preparation services only set up shop for the months leading up to April 15. In case the IRS finds errors, or in case of an audit, you might need to be able to contact your tax preparer throughout the year.
• Read the contract carefully.Make sure you understand issues such as how much it is going to cost for the service, 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.