Choosing Your Income Tax Preparer

New paid preparer regulations which include registration with the IRS, testing by the IRS and continuing education will affect 350,000 paid income tax return preparers beginning in 2012. Previously there were no minimum education requirements, no testing, and no continuing education requirements for someone to prepare income tax returns for a fee.

Effective 1/1/12, individuals preparing income tax returns for compensation must obtain a PTIN (Preparer Tax Identification Number) from the IRS. In order to obtain a PTIN the individual preparing the returns must be an attorney, a certified public accountant, an IRS enrolled agent, or must be someone supervised by one of these professionals. Otherwise the preparer will be required to pass a competency test developed and administered by the IRS and must take continuing education courses annually in order to renew their PTIN with the IRS.
If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely. Taxpayers are legally responsible for what's on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return.
This year, the IRS wants to remind all taxpayers that they should use only preparers who sign the returns they prepare and enter their Preparer Tax Identification Numbers (PTINs).
Here are a few points to keep in mind when someone else prepares your return:
• Check the person's qualifications. In addition to making sure they have a PTIN, ask if the preparer is affiliated with a professional organization and attends continuing education classes.
• Check the preparer's history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Enrollment for enrolled agents.
• Find out about their service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers. Under no circumstances should all or part of your refund be directly deposited into a preparer's bank account.
• Ask if they offer electronic filing. Any paid preparer who prepares and files more than 10 returns for clients must file the returns electronically, unless the client opts to file a paper return.
• Make sure the tax preparer is accessible. Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.
• Provide all records and receipts needed to prepare your return. Reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.
• Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.
• Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.
• Make sure the preparer signs the form and includes his or her preparer tax identification number (PTIN). A paid preparer must sign the return and include his or her PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.