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Selection of a Tax Preparer
Selection of a Tax Preparer
Return preparer fraud involves the preparation and
filing of false income tax returns by preparers who
claim inflated personal or business expenses, false
deductions, unallowable credits or excessive exemptions
on returns prepared for their clients. Preparers may,
for example, manipulate income figures to fraudulently
obtain tax credits, such as the Earned Income Tax Credit.
In some situations, the client, or taxpayer, may not
know of the false expenses, deductions, exemptions and/or
credits shown on his or her tax return.
However, when the IRS detects a fraudulent return,
the taxpayer - not the return preparer - must pay the
additional taxes and interest and may be subject to
penalties.
The IRS Return Preparer Program focuses on enhancing
compliance in the return-preparer community by investigating
and referring criminal activity by return preparers
to the Department of Justice for prosecution. The IRS
can also assert appropriate civil penalties against
unscrupulous return preparers.
While most preparers provide honest service to their
clients, the IRS urges taxpayers to be careful when
choosing a preparer -- as careful as they would be choosing
a doctor or lawyer. Even if someone else prepares a
tax return, the taxpayer is ultimately responsible for
all the information on the return. For that reason,
taxpayers should never sign a blank tax form. And they
should review the return before signing it and ask questions
on entries they don't understand.
Helpful Hints When Choosing a Return Preparer
Be cautious of tax preparers who claim they can obtain
larger refunds than other preparers.
Avoid preparers who base their fee on a percentage
of the refund.
Use a reputable tax professional who signs the tax
return and provides a copy.
Consider whether the individual or firm will be around
to answer questions about the preparation of the tax
return months, or even years, after the return has been
filed.
Check the person’s credentials. Only attorneys, certified
public accountants (CPAs) and enrolled agents can represent
taxpayers before the IRS in all matters, including audits,
collection and appeals. Other return preparers may only
represent taxpayers for audits of returns they actually
prepared.
Find out if the preparer is affiliated with a professional
organization that provides its members with continuing
education and resources and holds them to a code of
ethics.
Ask friends and family whether they know anyone who
has used the tax professional and whether they were
satisfied with the service they received
.
Reputable preparers will ask to see receipts and will
ask multiple questions to determine whether expenses,
deductions and other items qualify. By doing so, they
are trying to help their clients avoid penalties, interest
or additional taxes that could result from an IRS examination.
Resource: U.S. Treasury Department, Internal Revenue
Service.
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