If you run into problems with the tax man, it’s time to find tax consultants who can help you navigate through the process, but watch out for these 4 red flags.
The US tax system is far from simple. While every US taxpayer has an obligation to keep up with their filing requirements and tax return preparation, it’s easy to get lost in the web of rules and regulations surrounding our tax code, and the different forms the IRS might ask you to submit. There are forms of making large cash payments, forms for certain acts of charity, forms for declaring income outside of your day job, forms for foreign assets, and more.
If you’re having trouble keeping up with it all, your best bet is to get in touch with professional tax consultants. But tax preparation services vary in what they do and don’t offer, and it’s easy to get hurt by teaming up with the wrong tax consultant and preparation service. Even worse is becoming a victim of a tax prep scam, a problem every taxpayer should be aware of.
Finding Reputable Tax Consultants
If you’ve never hired tax consultants or preparation services before, knowing what to look for – and what to beware – can help. Here are our basic pointers.
Ensure That They’re Licensed
Professional tax consultants and preparers typically do work in financial, accounting, or legal industries, and the best ones will be accredited lawyers, certified public accountants, enrolled agents, or professionals who have attended and completed the IRS’s Annual Filing Season program with a title such as Accredited Business Accountant, Accredited Business Advisor, or Accredited Tax Preparer.
These are a lot of different titles, so it helps to narrow your search down by using online directories.
The IRS has its own directory of tax professionals with a Preparer Tax Identification Number (PTIN), which can give you a shortlist of professionals near you. You can identify services by PTIN-holding tax professionals with the following credentials:
- Attorney Credential
- Certified Public Accountant Credential
- Enrolled Agent Credential
- Enrolled Actuary Credential
- Enrolled Retirement Plan Agent Credential
- Annual Filing Season Program Participant
Ask for a PTIN
Speaking of a PTIN, it’s important to ask your tax preparer to present theirs. The IRS requires anyone who performs professional tax preparation services to have a PTIN. It’s important to distinguish volunteer tax preparers from ones who ask for financial compensation.
If you get your uncle to do your taxes, because he’s a savant in tax law and has offered to help you out, then you obviously won’t need him to get a PTIN or note it down in your return. But if you’re paying someone to take care of your taxes, every return they prepare must have their PTIN included in it.
What Organizations Do They Belong To?
Aside from credentials, one way to further cement the competence and reputation of your prospective tax consultants is by finding out what organizations and associations they belong to.
Membership in the local Bar, the National Association of Tax Professionals, the American Institute of Certified Public Accountants, and other similar national and state-level organizations requires that any given member act in accordance with the ethical and professional standards of the organization.
Being a member is a good sign, as it means the preparer you’re working with has held themselves to high standards within the industry.
Check Their Reputation
You can go a step further and leverage online review systems to get a better idea of what it’s like to work with this professional in the long-term. What do former clients have to say about them? How well do they curate their online image? Do they have reviews on the BBB, Google, or Yelp, and what do these reviews mention?
An online reputation isn’t everything, of course. Reviews can be bought, competitors can be review bombed, and one vindictive client with an exaggerated horror story can cost a company dozens of potential clients down the line.
But it doesn’t hurt to give any prospective tax professional a cursory online search and find out more about their client history.
Can They Represent You?
A questionable tax return, a forgotten detail, a puzzling or unique life, or just bad luck. These are some of the factors that might lead to an inquiry by the IRS, a potential IRS audit notification, and even a collection action on tax debt. When things go awry with the government, it helps to have a legal professional representing you.
But not all tax preparers are legal professionals. Some tax preparers can represent you in front of the IRS on matters such as payment, collection issues, and potential audits. These include enrolled agents, attorneys, and CPAs. Some tax professionals can only represent you under a limited capacity, such as those who completed the Annual Filing Season Program.
Some tax preparers can represent you, but don’t offer to do so as part of their preparation services, out of availability issues, or as part of their low-cost offering.
Be sure about what services you are and aren’t paying for when looking for tax consultants. It’s always best to work with a legal professional who not only offers to represent you, but is also communicative, keeps track of your tax history, and will follow up for other issues.
Of course, cost matters too. Don’t be afraid to compare and contrast between services.
4 Important Red Flags to Keep an Eye On When Searching For Tax Consultants
Just as there are tips and tricks for getting the best tax consultants on your side, there are also important red flags that you can’t afford to miss.
1. They Don’t E-File
It’s not just a matter of being old-fashioned. Tax consultants who do not offer the option of e-filing probably aren’t doing as much tax preparation work as they claim to do. The IRS requires all paid preparers who do more than ten returns a year to file electronically via the IRS’s online system.
2. They Ask You to Sign a Blank Return
Never sign a blank return. Fraudulent tax preparers and scammers can use signed blank returns to fudge the details, omit income, and even include their own bank details to steal your tax refunds.
3. They’re Sending and Receiving Via Email
Financial security is crucial when working on your taxes. Diligent and modern tax consultants will exchange only the bare minimum of details via email and will otherwise insist on secure and encrypted file sharing services when discussing your tax returns and working remotely.
4. They Barely Ask Questions
A good tax preparer should know that the average layman won’t remember to bring up every relevant detail during the first interview.
While you should be asking questions to satisfy your own curiosities and learn more about your tax consultants’ history and experience in the field, you should also expect to hear a lot of questions coming from your tax preparer if they’re serious about representing you and providing the best possible service.
Spotting the difference between a good and bad tax preparer can save you a small fortune, and plenty of headaches. Take your time, compare your options, and don’t be afraid to ask questions.
If you are looking for a qualified and professional tax consultant, contact Rush Tax Resolution today. We can help get you back into good standing with the IRS.