WASHINGTON – The Internal Revenue Service today reminded taxpayers to carefully select a tax return maker. Although the vast majority of tax filers provide honest, quality service, some cause great damage every year through fraud, identity theft, and other scams.
People appreciate good tax return preparers for helping them with a complicated tax situation or for being available when they don’t have time to prepare their own tax return. Paid tax return preparers completed more than half of the tax returns filed with the IRS in the 2018 tax year.
It is very important to choose the right tax advisor. After all, people trust them with their most sensitive personal and financial information. Regardless of who prepares it, the correctness of a tax return is ultimately the responsibility of the taxpayer. The IRS protects taxpayers by imposing significant civil penalties on dishonest returnees and working with the Department of Justice to stop fraud and prosecute the criminals behind it.
Please refer to the Selecting a Tax Professional page on IRS.gov for information on the tax filer’s credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Selected Qualifications can help identify many preparers by type of credentials or qualifications.
The law requires anyone paid to prepare or assist in preparing most federal tax returns must have a valid PTIN (Preparer Tax Identification Number). Paid creators have to sign and indicate their PTIN when returning the product. Failure to sign a return is a red flag the paid creator may seek to make a quick profit by promising a large refund or charging fees based on the amount of the refund.
Well-intentioned taxpayers can be fooled by creators who don’t understand taxes or mislead people into obtaining loans or deductions that are not entitled to them. Fraudulent preparers often do this to increase their fee. Here are some more tips to keep in mind:
- Look for a preparer who is available all year round. If questions arise about a tax return, taxpayers may need to contact the issuer after the filing season is over.
- Inquire whether the tax declarer has a professional qualification (registered representative, auditor or lawyer), belongs to a professional organization or is taking part in further training courses. Since tax law can be complex, competent tax return writers stay up to date on tax issues. Please refer to the IRS website for more information on national tax associations.
- Check the creator’s history. You can find information on the preparer on the Better Business Bureau website. Find disciplinary action and license status for creators with credentials. Contact the State Board of Accountancy for information on CPAs. For attorneys, contact the State Bar Association. For registered agents, go to IRS.gov and search for “Check Registered Agent Status” or check the directory.
- Ask about service fees. Avoid preparers who base fees on a percentage of their client’s refund or who have larger refunds than their competition. Don’t give a creator any tax documents, social security numbers, or other information just to inquire about their services and fees. Unfortunately, some unscrupulous creators have used this information to fail to file the tax return properly without the taxpayer’s permission.
- Provide records and receipts. Ask good preparers to see these documents. They also ask questions to determine the customer’s total income, deductions, tax credits, and other items. Don’t hire a preparer to email a tax return with a pay slip instead of a Form W-2. This is against the IRS e-file rules.
- Understand representation rules. Lawyers, CPAs, and registered agents can represent any client before the IRS in any situation. Participants in the annual filing season program can represent taxpayers in limited situations once they have prepared and signed the tax return.
- Never sign a blank or incomplete return.
- Check the tax return before signing it. Be sure to ask questions if something is not clear or appears imprecise. Any refund should go direct to the taxpayer – not to the issuer’s bank account. It’s always a good idea to check the routing number and bank account number when making a full return.
- Report abusive tax advisors to the IRS. Use Form 14157, Complaint: Tax Return PDF. If there is any suspicion that a return preparer is submitting or changing the return without the customer’s consent, also submit Form 14157-A, the return preparer PDF or the affidavit of misconduct. Forms are available on IRS.gov.
- IRS.gov/chooseataxpro has additional information to help taxpayers, including tips on choosing a preparer, the differences in credentials and qualifications, and filing a complaint about an unscrupulous tax return preparer.
Start early; Ask for phone or virtual help
It is advisable to start looking for a tax return maker as soon as possible. This gives more time for research and recommendations. Remember, taxpayers must pay all taxes due by April 15th, even if an extension is required.
Inquire with the tax return creator whether there are any restrictions or additions to the services they provide due to the COVID-19 pandemic. Some may offer phone or virtual assistance options in addition to their usual personal services. For example, customers can be asked to send documents to them, or scan documents over a secure Internet connection and email them.
Taxpayers can find answers to questions, forms and instructions, and easy-to-use tools online at IRS.gov. You can use these resources to get help when you need it, at home, at work, or on the go.
This press release is part of a series called the Tax Time Guide, a resource that helps taxpayers file an accurate tax return. For more help, see Publication 17, Your Federal Income Tax (For Individuals).