Many U.S. citizens use tax preparers at tax time, and competition can be fierce as tax professionals vie for your business. With around 150 million taxpayers seeking help with preparing and planning for their taxes, the business is a lucrative one and some preparers may try to tempt you with talk of low rates and gimmicky promotions, but then they may quickly add on fees for services which see their low rates suddenly skyrocketing.
Tax professionals who violate the rules may be subject to sanctions, but it’s not always easy to know what they should and shouldn’t be offering you. To help you avoid a bad experience with tax professionals at tax time, here are a few red flags to be aware of:
- Tax professionals without a PTIN (Preparer Tax Identification Number)
All tax professionals preparing federal tax returns for financial compensation, must have a valid PTIN before preparing returns. If your chosen preparer doesn’t have one, then they are simply not permitted by law to help you prepare your return.
- No signature on the return
Your tax preparer must firstly have a valid PTIN, but they must sign the return; if they do not, then they are not allowed by law to submit the return.
- An insistence that you mail your own tax return
There may be some rare cases in which it might be necessary or preferable to send your tax return by mail as was once always the case, but most tax preparers are required to submit prepared returns electronically. If you are not given the option to do so, then something may be afoot.
- Promises of a higher refund than your last when your circumstances haven’t altered
If your refund is going to be significantly higher than it was last year, and your circumstances haven’t changed at all, then it could be that your tax preparer has inflated your deductions. Don’t be afraid to ask for an explanation if this should happen to be the case.
- Asking you to sign a blank tax return
This should send out a big red warning signal; when in life do we ever sign something without reading it first? If you sign your return without having read it and without the opportunity to review it, you are signing under penalty of perjury.
Remember that these are simply warning signs and may not automatically indicate that your tax preparer is not legitimate or is trying to commit fraud. As when hiring any professional person to undertake work of a sensitive nature for you, do your research and ask around to see what others say about them.