February 8, 2016

Tax return preparation can be a lengthy and mind boggling affair, with many individuals preferring to leave their returns in the hands of a professional. Millions of returns were filed last year with the help of tax return preparers, but just how do you know which one you should choose? 

Are there different types of tax preparation professionals?

Yes, with each one being trained to a different degree and with varying levels of experience. Recently the IRS has begun a voluntary program to encourage tax return preparers to take part in education courses. Known as the ‘Annual Filing Season Program’ or ‘AFSP’, its main focus is on those who are not associated with groups or professional associations. They issue each preparer with a ‘PTIN’ or ‘Preparer Tax Identification Number’. 

Whose responsibility is it to check the credentials of a tax return preparer?

The responsibility lies with the tax payer, and you will need to ensure that you ask for references and an assurance that their office will remain open once your return has been filed, in case you or the IRS has any further questions afterwards. 

What are the different types of tax preparer professionals?

Firstly, there are what are known as tax preparation chains; a highly popular choice with individuals who have relatively straightforward returns, those who want a quick tax return turnaround and those avoiding higher charges of some tax professionals. 

Then are those tax return preparers who specialise in certain areas, and so if your tax circumstances are a little more complicated (such as you own a business or have multiple incomes) then these might best suit your needs. Enrolled agents or EA’s, for example, are licensed by the federal government and have the authority to appear instead of the taxpayer at any IRS meeting or hearing. You’ll find that many of these agents are former employees of the IRS or at the very least, have completed comprehensive IRS examinations. You will need to check their specific field of expertise before you hire them though. 

CPA’s or Certified Public Accountants may not be an expert on tax issues, despite the fact that they will have passed the relevant state’s qualifying accounting exam. They can help you formulate an overall tax plan though, and help you through any complicated financial situations, but you will need to ask them what their experience is with filing tax returns. 

Tax Attorneys are there to offer you help and guidance should you encounter any kind of legal issue with respect to your taxes, but they don’t necessarily specialise in filing tax returns. Should you be facing any criminal tax charges, an audit from the IRS, or owe back taxes, then you will definitely want to think about hiring a tax attorney, and they have the authority to represent you in court, too. 

For further information regarding tax return preparers in your area, it would be best to check with your local bar association chapter.

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