Washington News

As the tax filing season moves into high gear, the Internal Revenue Service (IRS) reminded taxpayers that a qualified tax preparer can help avoid identity theft, and financial harm. While most tax preparers are qualified and can be trusted, some individuals engage in fraud and identity theft, taking advantage of taxpayers.

Over half of Americans use a professional tax preparer. The IRS provides a Directory of Federal Tax Return Preparers with credentials and select qualifications on IRS.gov. Here are some key tips that will help you select a qualified and reputable tax preparer.

1. Tax Preparer Qualifications — All paid tax preparers must have a preparer tax identification number (PTIN). You should expect them to include the PTIN on your tax return. Many also have professional organizational membership or specific education. They should disclose their qualifications to you.
2. Tax Preparer History — Some preparers may have a history with the Better Business Bureau (BBB). This record would show any disciplinary action. There may be a record of action by a state board of accountancy for a certified public accountant (CPA) or by a state bar association for attorneys. The IRS Office of Enrollment keeps records on the enrolled agents who prepare taxes.
3. Fees for Service — Reputable tax preparers will generally charge a fee based on their hourly rate or a fixed amount. You should be careful to avoid any tax preparer who charges a fee that is a percentage of your tax refund. The refund also should be deposited directly into your checking account and not into the checking account of the tax preparer.
4. Electronic Filing — If a paid preparer files more than 10 returns, he or she is required to file electronically. The only exception is if you are required to file a paper return. The IRS has processed over 1 billion individual tax returns that have been filed electronically. Most taxpayers are far better off with an electronic tax return. This will reduce the time before you receive a tax refund.
5. Contact Information — Your tax preparer should provide all of their information, including an office address, email address and phone number. If there is any problem with your return, you may need to consult with your tax preparer about your response to the IRS.
6. Records and Receipts — You should expect your tax preparer to ask for all your records and receipts. He or she will need to verify your income, expenses, deductions and other data. Do not file a return with a tax preparer who completes the return before receiving your records and receipts.

The IRS also cautions taxpayers to be careful of "red flags." If any of these red flags are present, you should consider finding a different tax preparer.

1. Blank Return — You should avoid any tax preparer who asks you to sign a blank return. Your return should be fully complete before you sign it.
2. No Taxpayer Review — If your preparer asks you to sign the return without an opportunity to review it, that is a major problem. Taxpayers are legally responsible for the accuracy of income tax returns; you need to read through the return and see that your personal information has been included. If you have questions, the tax preparer should be willing to provide basic explanations about the return.
3. No PTIN on Return – All paid preparers are required by law to include the PTIN on the return. While the preparer signs the return, you are responsible for its accuracy. They should also provide you with a copy of your tax return.

If you are involved with a tax preparer who has one or more of these red flags, you can report the tax preparer to the IRS. Use IRS Form 14157, Complaint: Tax Return Preparer on IRS.gov.